Private equity in family firms: Drivers of the willingness to cede control

Our aim is to empirically examine how reasons for using private equity (PE) and prior experience with PE affect the willingness of privately held firms to cede company control. Based on a questionnaire entailing 75 privately held firms backed by PE, we show that family firms cede less control than non-family firms when entering a PE transaction. However, if firms seek funds due to challenges related to ownership changes, the difference between family firms and non-family firms decreases. Moreover, we find that family firms sell more company shares if they are run by a PEexperienced manager.