Measures of Value in Acquisitions: Family versus Nonfamily Firms

Family Business Review, vol. 23, no. 4, pp. 341-354, 2010

14 Pages Posted: 18 Nov 2012

See all articles by Francesco Chirico

Francesco Chirico

Macquarie University, Macquarie Business School; Jonkoping University - Jonkoping International Business School (JIBS)

Darya Granata

University of Lugano

Date Written: 2010

Abstract

This article sheds light on the valuation of family firms when compared with nonfamily firms as acquisition targets. The authors argue that although the majority of theoretical and empirical research explicitly recognizes the prevalence and superior performance of family firms around the world, acquiring companies tend to regard family firms as unprofessional and inefficient organizations, thus negatively affecting their valuation when compared with nonfamily firm targets. Overall, the authors’ empirical analysis, based on a matched-pairs methodology and use of multiples, shows that acquiring companies favor the stagnation perspective rather than the stewardship perspective and thus pay less (i.e., acquire at a discount) for a family firm target than for a nonfamily firm target

Keywords: family business, acquisitions, evaluation, EBIT, EBITDA

Suggested Citation

Chirico, Francesco and Granata, Darya, Measures of Value in Acquisitions: Family versus Nonfamily Firms (2010). Family Business Review, vol. 23, no. 4, pp. 341-354, 2010, Available at SSRN: https://ssrn.com/abstract=2177318

Francesco Chirico (Contact Author)

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

Jonkoping University - Jonkoping International Business School (JIBS) ( email )

Jönköping, 55111
Sweden

Darya Granata

University of Lugano ( email )

Via Giuseppe Buffi 13
Lugano, TN Ticino 6900
Switzerland

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