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

Abstract

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

Brexit, Private Equity and Management

“…If forecast dampening of growth and asset prices occurs, consequent increases in the incidence of corporate distress could provide attractive targets for PE investors. Alternatively, if asset prices are reduced, corporations and family owners of private businesses may be reluctant to sell unless they are under pressure to do so (Ahlers et al, 2016). Foreign divestments typically represent around 6% of PE buyouts, but could rise in importance in the short term.…”

What Form of Visibility Affects Earnings Management? Evidence from Italian Family and Non-Family Firms

“…It is not surprising because as firm age increases the generational effect intervenes. The exposure to the financial press is a form of visibility to investors and the result of the analysis is consistent and helps to explain the confidence of private equity firms in family businesses suggested by the literature (Ahlers et al 2017), as well as trust towards the family-controlled businesses recorded among non-professional investors (Lude and Prügl 2019). On the other hand, the effect of family control is also significant in concomitance with proximity to the consumer, suggesting that family businesses are aware of the fact that the consumer has particular expectations about not only social but also economic and financial behaviour on the part of the family business, as evidenced by the literature (Binz et al 2013).…”

Relationship Conflict, Family Name Congruence, and Socioemotional Wealth in Family Firms

“…Researchers should also seize opportunities to investigate actual transfers of corporate control (e.g., Capron & Shen, 2007). It would be informative to confirm if higher levels of SEW among owners make the transfer of the firm to third parties less likely (see also Ahlers, Hack, Kellermanns, & Wright, 2017). If the endowment effect for family owners results in a significant bid-ask spread, SEW factors could ultimately influence the efficient allocation of capital in the family firm realm.…”