Mergers and acquisitions in family businesses: current literature and future insights

Abstract

Purpose The purpose of this paper is to examine the current state of literature concerning mergers and acquisitions (M&A) in family businesses and to highlight areas for future research. Design/methodology/approach This literature review systematically analyses the findings of 41 journal articles on M&A in family businesses, identifying key thematic categories according to the main topics of the studies. Findings This study finds that it is important to distinguish and examine the type of governance, such as family and non-family, when studying M&A issues, because their distinctive features influence their strategic choices, business goals, and, thus, M&A behavior. Three topic areas are identified in existing research: M&A propensity, process, and performance. Furthermore, methodological and definitional issues regarding the findings are discussed. Research limitations/implications The findings imply that owing to their idiosyncratic nature, the use of alternative theoretical frameworks in addition to agency theory is encouraged in future studies in order to better capture the nature of family businesses. In general, further research on M&A issues in family business settings is needed, especially in the pre-merger phase, which is crucial to M&A performance. Social implications Overlooking particular issues that may arise in the context of transactions involving family businesses may lead to problems in M&A processes. Recognizing the importance of these issues in such transactions has important value for practitioners supporting family businesses in M&A processes. Originality/value This study takes the first step in analyzing the literature on M&A in family businesses, establishing linkages between family business, corporate governance, and financial management literature, and structuring the existing research to highlight opportunities with relevance for both theory and practice.

“SEW” What Do We Know and Where Do We Go? A Review of Socioemotional Wealth and a Way Forward

“…To identify relevant articles, we employed a four-step search process. First, adhering to journal recommendations by Debicki et al (2009), we searched for the following keywords among article titles, keywords, and abstracts: "family firm" OR "family business" OR "family enterprise" OR "family control*" (Hiebl, 2013;López-Fernández et al, 2016;Worek, 2017). Second, we retained all articles citing Gómez-Mejía et al (2007), resulting in 329 peer-reviewed articles.…”

Firm Acquisitions by Family Firms: A Mixed Gamble Approach

“…How does this fit to the well-established finding that family firms have a longer time orientation than nonfamily firms (Sirmon & Hitt., 2003) and, thus, by neglecting the option of firm acquisitions may forgo an important strategic means that promises longer term advantages? And how does this fit to the empirical observation that family firms are, in fact, engaging in the market for corporate control (Family Capital, 2015; Worek, 2017) and that their postacquisition performance is not worse than that of nonfamily firms? (See Caprio et al, 2011; Shim & Okamuro, 2011.)…”

“…BAM views the aim of preserving SEW as the sole main driver of family firms’ strategic actions. This leads to the prediction that family firms are reluctant to engage in risky activities such as firm acquisitions (Caprio et al, 2011; Shim & Okamuro, 2011) but cannot help explaining the fact that family firms are, in fact, well engaged in the market for corporate control (Family Capital, 2015; Worek, 2017).…”

Family trends shaping the family business landscape

“…If family firms choose to transfer their business to outsiders, they lose their "family firm status," but it is unclear what makes such a tran-sition effective. The majority of merger and acquisition research takes the perspective of family firms as acquirer (Worek, 2017). Mickelson and Worley (2003) suggest that as targets, family firms are more complex due to the family's emotional attachment to the firm and the way family involvement affects the firm's structure and behavior.…”