Buy-outs in family businesses
Changes in Corporate Governance, Instruments of Managerial Control, and Financial Practices
In 2005, a heated debate emerged regarding whether private equity firms profit by downsizing or genuinely create value. Dr. Oliver Klöckner and I undertook an extensive study on this issue, concluding that while some private equity-backed companies experienced job cuts, the overall impact on employment was positive, particularly in family businesses, which saw employment growth surpassing that of other private equity-backed firms. When we presented our findings to various audiences, we were often questioned about the remarkable job creation in family businesses—a query we could not address at the time. This prompted Dr. Klöckner to initiate a research project focusing on the effects of buy-outs in family firms, culminating in this thesis. He constructs a comprehensive analytical framework and engages in a theoretical discussion comparing key theories related to family businesses and private equity. Through a thorough literature review, he highlights the unique traits of family businesses versus those of bought-out companies. To further substantiate his analysis, Dr. Klöckner conducted 32 personal interviews with managers from bought-out family businesses and investment managers involved in these transactions.
