The paper examines the economic impact of 32 Private Equity buyouts on family owned firms carried out in Italy between 1995 and 2003. The research aims at highlighting the suitability of Private Equity buyouts as a means for Family Business succession. Publicly available accounting data are used to track performance on a six year period, from two years before the deal to three years after. The average values of selected performance measures before and after the buyouts are thus compared. We find a significant increase in performance measures related to market efficacy and employment and mixed evidences suggesting a probable increase in profitability and decrease in efficiency. The results have practical implications for the role of Private Equity industry in sustaining firms’ growth. Implications for agency and entrepreneurship theories are also discussed.
The Impact of Private Equity on Family Firm Performance
BUTTIGNON, FABIO;BORTOLUZZI, PAOLO;
2007
Abstract
The paper examines the economic impact of 32 Private Equity buyouts on family owned firms carried out in Italy between 1995 and 2003. The research aims at highlighting the suitability of Private Equity buyouts as a means for Family Business succession. Publicly available accounting data are used to track performance on a six year period, from two years before the deal to three years after. The average values of selected performance measures before and after the buyouts are thus compared. We find a significant increase in performance measures related to market efficacy and employment and mixed evidences suggesting a probable increase in profitability and decrease in efficiency. The results have practical implications for the role of Private Equity industry in sustaining firms’ growth. Implications for agency and entrepreneurship theories are also discussed.
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