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Private equity investment decisions in family firms: The role of human resources and agency costs

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  • Dawson, Alexandra
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    Abstract

    This study examines decision making criteria that are employed by private equity (PE) investors selecting family firms. Hypotheses test the likelihood of investment based on family firm characteristics. Findings show that PE professionals take into account family-specific criteria, including human resources and opportunities to reduce agency costs. Furthermore, PE professionals prefer family firms that are already professionalized. This research contributes to the family firm literature on both a theoretical and a methodological level, exploring nonfamily succession routes and employing techniques-- conjoint analysis for data collection and multilevel models for data analysis-- that have seldom been used in this context.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Business Venturing.

    Volume (Year): 26 (2011)
    Issue (Month): 2 (March)
    Pages: 189-199

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    Handle: RePEc:eee:jbvent:v:26:y:2011:i:2:p:189-199

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    Web page: http://www.elsevier.com/locate/jbusvent

    Related research

    Keywords: Family Firms Private Equity Decision Making Conjoint Analysis;

    References

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    Cited by:
    1. Patricia Crifo & Vanina Forget & Sabrina Teyssier, 2012. "The price of unsustainability: An experiment with professional private equity investors," Working Papers hal-00757203, HAL.
    2. Dawson, Alexandra, 2012. "Human capital in family businesses: Focusing on the individual level," Journal of Family Business Strategy, Elsevier, vol. 3(1), pages 3-11.
    3. Dehlen, Tobias & Zellweger, Thomas & Kammerlander, Nadine & Halter, Frank, 2014. "The role of information asymmetry in the choice of entrepreneurial exit routes," Journal of Business Venturing, Elsevier, vol. 29(2), pages 193-209.
    4. Gonzalez-Diaz, Manuel & Solis-Rodriguez, Vanesa, 2012. "Why do entrepreneurs use franchising as a financial tool? An agency explanation," Journal of Business Venturing, Elsevier, vol. 27(3), pages 325-341.
    5. Hanisch, David N. & Rau, Sabine B., 2014. "Application of metric conjoint analysis in family business research," Journal of Family Business Strategy, Elsevier, vol. 5(1), pages 72-84.

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