By building upon instrumental stakeholder theory, we aim to increase academic understanding of how changes in stakeholder relations affect acquisition performance outcomes in a private equity (PE) family firm buyout, during the holding period. With our sample of 134 PE-backed family firm buyouts, we find evidence to suggest that reducing social engagement during the holding period decreases medium-term performance, whereas the termination of existing supplier relationships affects this positively. Moreover, our data suggests that effects concerning the reduction of social engagement and employee downsizing are negatively moderated by increased levels of family ownership prior to the PE deal.

Advancing the literature on Private Equity (PE) buyout negotiations and family-business decision making, we theorize and empirically confirm that sources of bargaining power (i.e., PE expertise advantage and seller's time pressure) interact differently with perceived PE bargaining power, depending upon whether the seller is a family or a non-family business. Additionally, we demonstrate that, for family businesses with an increased family team complexity, the effect of bidder competition becomes weaker, whereas the relationship of PE expertise advantage on PE bargaining power becomes stronger. Hence, team complexity reduces a family business' decision power and increases a PE's comparative bargaining advantages. These findings contribute to several research streams: first, to that of family businesses by advancing knowledge on heterogeneity, operationalized as team complexity, that negatively affects a family business' bargaining power; second, to that on PE buyouts, with a finding that a PE firm's bargaining power differs significantly depending upon the type of seller (family vs. non-family business) due to a family business' unique socio-emotional wealth considerations; and third, to the general strategic management literature on upper echelons and top-management teams (TMT), with a finding that team complexity reduces the family business teams' behavioral integration and hence its ability to use potential bargaining advantages.

In this paper we investigate private equity firm perceptions of sellers' affective deal commitment in buyout transactions. Using a sample of 174 buyouts, we test trust, goal congruence and private equity reputation as potential antecedents of perceived deal commitment. We also examine whether and how different types of sellers, family versus non-family firms, moderate sources of perceived affective deal commitment. In sum, we find evidence that non-financial factors play a role in buyouts, particularly for family firm sellers.

This paper studies bargaining power in buyout transactions between private equity (PE) firms and current family firm owners who sell their business. We use a hand-collected sub-sample of 86 family firm buyouts and confirmed sources of bargaining power such as competition, expertise, and time pressure which had been established in previous literature for the important category of family firms. We further tested factors of family influence such as

The management buyout is an important exit strategy for small business owners. Negotiations of buyout deals have received little research attention to date. This is surprising given buyout negotiations' complexity giving rise to multiple issues that require consideration and often conflicting interests of deal parties. This paper examines perceived bargaining power in buyout negotiations between private equity (PE) firms and current owners who sell their business. We identify competition, expertise, and time pressure as key antecedents of PE firms’ perceived bargaining power and examine the moderating effect of PE firms' industry and size specialization in buyout negotiations. We use a sample of 176 respondents who each report on a particular buyout deal for a PE firm. The majority of respondents are seasoned PE professionals who held managing director or investment director positions.

An increasing number of families are selling their businesses to private equity (PE) investors. A key question is what the family firm is worth without the family as part of the business. We provide a buyers' perspective on the valuation of the family firm and argue that prior family involvement provides the PE buyer with a distinct landscape of real options that require consideration. While the buyer gains real options for external (economic) value creation as a result of family departure, family exit after the sale triggers a loss of family dependent real options, which may subsequently reduce economic value for the new owner. Consequently, these two opposing effects need to be considered when accounting for the central role of the family and whether these effects result in an increased or decreased valuation of family firms. (C) 2014 Elsevier Ltd. All rights reserved.