Private Equity Minority Investments in Large Family Firms: What Influences the Attitude of Family Firm Owners?

28 Pages Posted: 11 Nov 2008

See all articles by Ann‐Kristin Achleitner

Ann‐Kristin Achleitner

Technische Universität München - Center for Entrepreneurial and Financial Studies

Stephanie Schraml

Technische Universität München - Center for Entrepreneurial and Financial Studies

Florian Tappeiner

Technische Universität München - Center for Entrepreneurial and Financial Studies

Date Written: November 11, 2008

Abstract

This paper extends research in the field of private equity investments in family firms. It contributes to the literature by fundamentally analyzing the decision criteria of family firm owners for using minority investments of private equity investors. This type of financing might be of great interest to family firms, as the family firm owner is able to secure majority ownership and control over the family business. Likewise, minority investments might be attractive for private equity investors, as they are mostly not leveraged and therefore independent from capital market turbulences.

Using data from 21 case studies, we identify challenges induced by the family or the business that lead to the phenomenon of private equity minority investments in family firms. We find that perceived benefits and drawbacks of private equity investments are influenced by business and family characteristics. Based on pecking-order theory, resource-based view and the strategy paradigm, propositions as well as a conceptual framework are developed.

Keywords: Private equity, minority investments, family firms, financing, managerial resources

JEL Classification: G32, G34, G24

Suggested Citation

Achleitner, Ann-Kristin and Schraml, Stephanie and Tappeiner, Florian, Private Equity Minority Investments in Large Family Firms: What Influences the Attitude of Family Firm Owners? (November 11, 2008). Available at SSRN: https://ssrn.com/abstract=1299573 or http://dx.doi.org/10.2139/ssrn.1299573

Ann-Kristin Achleitner

Technische Universität München - Center for Entrepreneurial and Financial Studies ( email )

Arcisstr. 21
Munich, D-80290
Germany
+49 89 289 25181 (Phone)

Stephanie Schraml

Technische Universität München - Center for Entrepreneurial and Financial Studies ( email )

Arcisstr. 21
Munich, 80333
Germany

Florian Tappeiner (Contact Author)

Technische Universität München - Center for Entrepreneurial and Financial Studies ( email )

Arcisstr. 21
Munich, 80333
Germany

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