Management control mechanisms in a private equity buy-and-build investment

Abstract: With the aim of contributing to the management control literature within private equity ("PE"), this paper investigates the management control mechanisms ("MCMs") implemented in a PE investment with a buy-and-build ("B&B") strategy by utilising a single case study. The case company is a fast-growing acquirer of entrepreneur-led companies which operate fairly autonomously, hence leading to a constant balancing act between controlling the discourse whilst simultaneously enabling action. Firstly, our findings shed light on the 'package' of MCMs deployed in such a case, where we identify similarities and discrepancies compared to previous literature on management control relevant to our setting. We find that previous literature on control mechanisms does not capture the full complexity of a B&B strategy and that social controls are more prevalent than expected in our case. Secondly, by drawing upon previous literature on coercive and enabling logics as an analytical lens, we nuance the management control literature within the PE context by providing colour on the interplay of enabling and coercive logics and the inherent balancing act of the logics in the package of MCMs. In this case study, we find that there exist MCMs with elements of the coercive and enabling logics that contribute to the balancing act.