Different perspectives on time - A multiple case study on the partnership between private equity firms and family businesses

Abstract: Research is undecided on whether private equity firms and family businesses are suitable partners or not, some argue that they are opposite in their very nature. Private equity funds typically acquire majority stakes and offer families a journey of growth for a period of 4-7 years. The authors have conducted a multiple case study of four private equity-family business investments, to understand where the agendas intersect. Findings indicate that transactions in which the family business has reduced emotional attachment and family specific resources prior to entry, are more suitable for private equity firms. The short-term time horizon of private equity firms, in relation to families' contextual factors, determines how value creation plans are implemented. To conclude, family businesses that have retained strong family bonds and rely on family specific resources to run the business, may contradict with the private equity time horizon.