Family Exit in Family Firms: How Network Ties Affect the Owner’s Intention to Follow the Private Equity Succession Route

We study private equity as a succession route in family firms. Using survey data from Germany, we empirically examine the role owner-managers and their network ties play in the early process of firm succession. Our evidence suggests that network ties, strong ties in particular, matter to owner-managers when they consider a sale to private equity. Applying the Theory of Planned Behavior, we find that subjective norms and attitude explain the intention to sell to private equity investors, while entrepreneurial network ties explain the subjective norm component. We further show that subjective norm mediates the relationship of network ties on intention.