Demand for private equity minority investments: A study of large family firms

Is it All About Money? – Affective Commitment and the Difference Between Family and Non‐family Sellers in Buyouts

“…To quote one family entrepreneur in the case study analysis of Tappeiner et al . (, p. 47), ‘We did not look at any other PE houses. We only knew them and we trusted the people.’…”

“…Family firms differ from non-family firms in that the family influences mission, strategy, objectives, and resources and capabilities (Chrisman, Chua and Kellermanns, 2009;Sharma, 2004). The relationship between PE firms and family firms has some potential for further research on its distinctive nature (Tappeiner et al, 2012). Compared to family firms, PE firms are relatively short-term and profit-focused investors who use considerable leverage to finance deals (Dawson, 2011).…”

“…If family sellers depart from full control of the business, it becomes critical that they can trust to whom they sell their 'lifetime achievement'. Indeed, family firms look for PE firms as exchange partners whom they trust and they could (intentionally) limit their search for transaction partners, despite the fact that selling in an auction could maximize the selling price (Tappeiner et al, 2012). To quote one family entrepreneur in the case study analysis of Tappeiner et al (2012, p. 47), 'We did not look at any other PE houses.…”

“…Given the pronounced role of trust in our research and the moderating effect of family sellers, further research into the specific antecedents of trust, such as how trust can be generated in buyouts, is needed. There is some preliminary evidence that respect given to sellers and the seniority of PE managers might have an effect on trust generation in buyout deals (Tappeiner et al, 2012). However, more detailed and comprehensive analysis is needed.…”

“…Gómez-Mejía et al, 2007;Zellweger et al, 2012). Due to SEW, family firm sellers make conscious selection decisions about PE firms as transaction partners, in which the relationship or affective dimension plays a key role (Tappeiner et al, 2012). In this regard, family sellers could constitute a class of sellers for whom the relationship with a potential buyer is even more important than for non-family sellers.…”