When no suitable family successor can be identified, private family firm owners may select a management buyout (MBO) or a management buyin (MBI) exit route. After a private equity backed MBO/I, new owners may select strategies that encourage superior firm performance. We explore the strategic orientation of former private family firms pre- and post-MBO/Is. Ownership and governance issues are considered. Following insights from agency and stewardship theory, several hypotheses are derived and tested with reference to a representative sample of 104 MBO/ Is located across Europe. Univariate analysis suggests greater scope for efficiency gains and growth in cases where the founder was present at time of buyout, where no managers with equity stakes or non-executive directors were employed pre-buyout, and where the private equity investor and management were involved in succession planning. Multinomial logistic regression suggests efficiency gains in firms with no equity holding non-family managers pre-buyout. Conclusions and implications are discussed.

Additional Metadata
Keywords Family firm, governance, management buyout, ownership, private equity, strategy, succession
Persistent URL dx.doi.org/10.1177/0266242610370390, hdl.handle.net/1765/21701
Citation
Scholes, L., Wright, D.M., Westhead, P., & Bruining, H.. (2010). Strategic changes in family firms post management buyout: Ownership and governance issues. International Small Business Journal, 28(5), 505–521. doi:10.1177/0266242610370390