Information Sharing, Price Negotiation and Management Buy-outs of Private Family-owned Firms

Abstract

family firms, succession, management buy-out, information asymmetry negotiation behaviour, corporate governance, L26,

Selling, Passing on or Closing? Determinants of Entrepreneurial Intentions on Exit Modes

“…Firms can be liquidated -either compulsory or voluntarily -or sold through a trade sale or an initial public offering (IPO). While IPOs are not generally considered to be feasible except for a few firms with high growth potential backed by venture capitalists (Poutziouris, 2002), trade sales are regarded as unattractive if the identity of the firm should be maintained in the future (Scholes et al, 2007).…”

“…Alternatively, management buy-in (MBI) and management buy-out (MBO) provide the possibility of continued independent ownership that allow the owners to realize their investment: MBI and MBO describe the transfer of ownership to external and internal management, respectively (Scholes et al, 2007;Scholes et al, 2008). These two options are of particular interest for small firm owners.…”

“…proportion of non-family management, outside directors or venture capitalists) and the objectives (i.e. long-term survival, family agenda) of the firm (Scholes et al, 2007;Scholes et al, 2008).…”

“…In addition to maintaining their own involvement, maintaining the identity and tradition of their firm in the future might be of equal importance to owner-founders. In this case, a business sale is less likely to occur (Scholes et al, 2007). The owners who have purchased the firm, however, might be more likely to view the firm as a tradable asset with an interest to harvest their investment.…”

Social networking in family businesses in a local economy

“…The successful development and sale of this initial business, involving private equity investors and a change in the internal culture of the business (Scholes et al, 2007), created a situation where the family were keen to continue in business but with a much clearer vision of the form that might take. A distinct preference for operating in an area where those in control of the day-to-day operation also had decision making authority links to agency theory (Oswald et al, 2009) but was perceived here as a lifestyle choice, which it was assumed would also benefit business performance.…”