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Does the private equity financing improve performance in family SMEs?

Does the private equity financing improve performance in family SMEs? The purpose of this paper is to explore the relation between family involvement in ownership and the performance of private equity (PE)-backed SMEs.Design/methodology/approachUsing a sample of 533 European PE-backed SMEs (i.e. 107 PE-backed family SMEs and 426 PE backed non-family SMEs), the author estimate the OLS model where a firms operating performance is a function of the presence or not of family shareholders, various other firm-specific characteristics, the experience of PE investor and a dummy for the financial crisis. To control the robustness of results, the author restrict the analysis to those firms that are incorporated in one of the 15 old member states of the European Union and the author include among the independent variables the one-year lagged values of the dependent variable.FindingsThe results show that PE-backed family SMEs outperform non-family PE-backed SMEs over the post-investment period.Originality/valueThis paper aims to extend literature about the link between PE backing and the involvement of family in ownership, considering European countries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Family Business Management Emerald Publishing

Does the private equity financing improve performance in family SMEs?

Journal of Family Business Management , Volume 9 (1): 15 – Mar 5, 2019

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
2043-6238
DOI
10.1108/jfbm-12-2017-0046
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to explore the relation between family involvement in ownership and the performance of private equity (PE)-backed SMEs.Design/methodology/approachUsing a sample of 533 European PE-backed SMEs (i.e. 107 PE-backed family SMEs and 426 PE backed non-family SMEs), the author estimate the OLS model where a firms operating performance is a function of the presence or not of family shareholders, various other firm-specific characteristics, the experience of PE investor and a dummy for the financial crisis. To control the robustness of results, the author restrict the analysis to those firms that are incorporated in one of the 15 old member states of the European Union and the author include among the independent variables the one-year lagged values of the dependent variable.FindingsThe results show that PE-backed family SMEs outperform non-family PE-backed SMEs over the post-investment period.Originality/valueThis paper aims to extend literature about the link between PE backing and the involvement of family in ownership, considering European countries.

Journal

Journal of Family Business ManagementEmerald Publishing

Published: Mar 5, 2019

Keywords: Performance; SMEs; Family firms; Private equity; G24; G32; G34

References