Faculty & Research
Knowledge creation on China, from proven China experts.
Faculty & Research
Knowledge creation on China, from proven China experts.
To Whom Does The Family Sell The Firm? The Choice Between Strategic and Financial Buyers in Acquisitions
Authors:
Lucia Pierini; Saverio Bozzolan; Belén Villalonga
Abstract:
We study whether and why the choice of buyer in acquisitions is associated with the founding family’s involvement in the target firm. We consider two types of buyer—strategic v. financial—and three levels of family involvement— ownership, management, and the board. Using a sample of 917 majority acquisitions completed between 2006 and 2016 in the United States, we find that higher ownership by controlling family shareholders makes firms more inclined to choose a strategic buyer, as does having a family CEO/Chairman. On the other hand, having family directors makes firms more inclined to choose a financial buyer. Our results suggest that families’ desire to protect their socio- emotional wealth is an important motivation behind their choice of whom to sell their firm to, but agency considerations matter too.
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