Kapitalfondsejerskabets effekt på tidligere familieejede virksomheder og deres performance

Julie Cecillie Grundtvig & Kristine Amalie Weinreich Roll

Student thesis: Master thesis

Abstract

The purpose of this thesis is to investigate the impact of private equity (PE) ownership on former family-owned businesses and their performance by using a mixed-methods approach with both a qualitative and quantitative analysis. Family-owned businesses are greatly characterized by their emotional attachment and long-term perspective, whereas, in contrast, PE firms focus on financial performance and value creation with a sense of urgency. The qualitative analysis, based on 11 interviews, confirms the hypothesis that PE firms contribute to former family-owned businesses in those areas, where family-owned businesses are typically challenged. Fundamentally, the challenges that family-owned businesses face often involve areas that are central parts of the unique skillset seen in PE firms. Thus, the main contributions from PE ownership involve competences and experience, network, professionalism and an analytical approach. The quantitative analysis investigates whether these contributions from PE ownership are reflected in the financial performance of the former family-owned businesses. The analysis is conducted through difference-in-difference estimation, which indicates that there is, on average, a positive statistically significant effect on family-owned businesses’ financial performance of being acquired by a PE fund. Furthermore, the analysis indicates that the effect on performance is greatest when the PE fund acquires the majority of the shares. Overall, the thesis concludes that PE ownership has a positive impact on former family-owned businesses and their performance, which is driven by PE contributions in areas where family-owned businesses are typically challenged. The impact on the performance of former family-owned businesses is supported through the statistically estimated positive effect of a buyout. Although family-owned businesses have a dominant role in the global economy and PE firms play an increasingly significant role in the M&A market, the existing literature covering the overlap between family-owned businesses and PE firms is scarce. Thus, this thesis contributes to an uninvestigated research area, and is highly relevant for both family-owners and PE professionals.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2020
Number of pages152