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While research has commonly assumed that business-owning families are concerned about the preservation of control, families are increasingly seeking cooperation with external investors to accomplish firm- or family-level goals. In this paper, we provide a conceptual configuration of the different governance scenarios that may arise when family owners attract outside capital. Combining two important family objectives—(a) to provide liquidity either to the family or to the firm, and (b) to cede or to retain long-term family control—we identify four scenarios with different governance implications and preferred types of external investors. Our analysis increases understanding of the evolving structures of ownership in private family firms, the effectiveness and efficiency of governance arrangements in family firm–external investor cooperation, and the increasingly heterogeneous private equity funding landscape. [ABSTRACT FROM AUTHOR]

This paper documents a methodology used to assess, for the first time, the costs to the taxpayer of small and medium enterprise (SME) and entrepreneurship policy in Sweden. It then [...]

This paper studies the role of entrepreneurs in investment tie formation in science-based entrepreneurial firms. Specifically, we address why investment tie formation is path dependent for some firms but more [...]

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-6486.2009.00897.x Byline: Miguel Meuleman (1), Andy Lockett (2), Sophie Manigart (3), Mike Wright (2) Abstract: abstract By combining insights from relational network theory and agency theory we identify the boundary conditions to the embeddedness approach to partner selection decisions in interfirm collaborations. Employing a longitudinal dataset comprising the investment syndicates for the population of UK management buyouts between 1993 and 2003, we find that relational embeddedness is less important for selecting partners when agency risks are low, allowing firms to expand their networks. Furthermore, reputational capital may act as a partial substitute for relational embeddedness, again permitting firms to expand their networks. Our findings enhance understanding of the boundary conditions associated with the relational network approach to partner selections and network behaviour. Author Affiliation: (1)Vlerick Leuven Gent Management School; (2)Nottingham University Business School; (3)Ghent University Article note: Mike Wright, Centre for Management Buy-out Research, Nottingham University Business School, Jubilee Campus, Wollaton Road, Nottingham NG8 1BB, UK (mike.wright@nottingham.ac.uk).

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1468-5957.2009.02124.x Byline: Miguel Meuleman (1), Mike Wright (1), Sophie Manigart (1), Andy Lockett (1) Keywords: private equity; syndication; agency theory; leveraged buyouts; venture capital Abstract: Abstract: Syndicates are a form of inter-firm alliance in which two or more private equity firms invest together in an investee firm and share a joint pay-off, and are an enduring feature of the leveraged buyout (LBO) and private equity industry. This study examines the relationship between syndication and agency costs at the investor-investee level, and the extent to which the reputation and the network position of the lead investor mediate this relationship. We examine this relationship using a sample of 1,122 buyout investments by 80 private equity companies in the UK between 1993 and 2006. Our findings show that where agency costs are highest, and hence ex-post monitoring by the lead investor is more important, syndication is less likely to occur. The negative relationship between agency costs and syndication, however, is alleviated by the reputation and network position of the lead investor firm. Author Affiliation: (1)The first author is from Vlerick Leuven Gent Management School and Centre for Management Buy-out Research Nottingham University Business School. The second author is from the Centre for Management Buy-out Research Nottingham University Business School and RSM, Erasmus University, Rotterdam. The third author is from Vlerick Leuven Gent Management School and Universiteit Gent, Belgium. The fourth author is from the Centre for Management Buy-out Research Nottingham University Business School. They would like to thank the editor and the anonymous referee for very helpful comments. Thanks to Barclays Private Equity for financial support. Article History: (Paper received April 2007, revised version accepted December 2008) Article note: (*) Address for correspondence: Mike Wright, Centre for Management Buy-out Research, Nottingham University Business School, Jubilee Campus, Wollaton Road, Nottingham NG8 1BB, UK., e-mail: mike.wright@nottingham.ac.uk

Agency theory has focused on buyouts as a governance and control device to increase profitability, organizational efficiency, and limited attention to growth. A strategic entrepreneurship view of buyouts incorporates upside [...]

Financial theory, access to deal flow, selection, and monitoring skills are used to explain syndication in venture capital firms in six European countries. In contrast with U.S. findings, portfolio management [...]

Previous research has focused on a private equity (PE) firm’s role as principal in its relationship with an investee, but few studies have looked into their role as agents for their investors. We examine how a PE firm’s relationship as agent for limited partners (LPs) and banks influences its incentives to resolve financial distress in the investee. We examine the effect of PE fundraising reputation, PE fundraising activity, and PE bank affiliation on the likelihood of a financially distressed buyout ending in bankruptcy. We build a unique data set of 338 distressed buyouts in the United Kingdom to test our hypotheses. [ABSTRACT FROM AUTHOR]

More and more family firms open their capital for outside investors, yet existing studies mainly conclude that family firms are more reluctant than nonfamily firms to hand over control to outside investors. In this study, we build on an organizational identification perspective to explore why family firms differ in their attitudes toward outside investors. We hypothesize that family members who identify strongly with their firms are less willing to cede control to outside investors and, if they do cede control, have a stronger preference for investors who may readily identify with family firms, such as family offices or high net worth individuals, rather than investors who may not fit well with a familial identity, such as private equity sponsors or financial investors. We also hypothesize that social identification mediates the relationship between important family firm governance characteristics and preferences for outside investor. Exploratory evidence from a sample of Belgian family firms is supportive of most of our predictions. [ABSTRACT FROM AUTHOR]

Up to now, little attention has been paid to the continuity of a firm when entrepreneurs exit. Survey data from 175 entrepreneurs confirm the theory of planned behavior as an appropriate framework to understand whether entrepreneurs, when leaving, sell or liquidate their firm. Entrepreneurs' sale attitudes are related to sale intentions, which are associated with firm sale. Further, sale attitudes are positively related to whether entrepreneurs perceive firm continuation to be out of free will, their experience, the number of employees, and whether the firm is a multigeneration family business. [ABSTRACT FROM AUTHOR]

We combine insights from multiple agency theory with the resource-based view (RBV) to explain outcomes of financial distress in entrepreneurial buyouts. We examine the effect of 1) PE reputation 2) PE experience 3) PE type 4) PE fundraising efforts 5) board experience and 6) board proximity on the likelihood of a financially distressed buyout ending up in bankruptcy rather than remaining a going concern. We build a unique dataset of 440 distressed buyout transactions, comprising 1287 firm-year observations in the UK during the period 1995 to 2010. We find that the probability of a distressed buyout ending up in bankruptcy reduces when PE firms are raising new funds from limited partners. Distressed buyouts backed by bank-affiliated PEs are also less likely to end up in bankruptcy. Finally, the more insiders on the board and the more experienced the board of directors, the less likely that a buyout will end up in bankruptcy. [ABSTRACT FROM AUTHOR]

The Theory of Planned Behavior (TPB) is used in this paper to empirically study whether an entrepreneur transfers his/her firm, conditional on exiting the firm. TPB posits that entrepreneurial intentions drive actions, being the transfer of a business. The TPB framework is expanded by assessing whether formal and informal planning of the exit process further explains the remaining gap between intentions to transfer and the actual transfer. Based on survey responses of 198 Belgian entrepreneurs who exited their company between 2001 and 2006, the TPB explains both the intention to transfer and the actual transfer with a significant amount of variance. Formal planning of the exit has no direct impact on business transfers. [ABSTRACT FROM AUTHOR]