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Purpose Adopting an integrated agency and stewardship perspective, the purpose of this paper is to understand the relationship between family businesses (FBs) and private equity (PE) investors at three stages: entry, cooperation, and exit. Design/methodology/approach This qualitative study combines the perspectives of 11 FB owners and/or managers, seven PE investors, and four intermediaries. The in-depth interviews of this purposive sample are analysed at the intra- and inter-case level using a template analysis approach up to reaching theoretical saturation. Findings Building and maintaining an effective relationship between the FB and the PE investor requires both a stewardship perspective (i.e. reciprocal principal-steward behaviour) and a necessary but insufficient agency perspective (i.e. principal-principal behaviour). Research limitations/implications More large-scale studies with an integrated agency-stewardship perspective on FBs using PE can increase the external validity of the insights from this research to build and maintain an effective relationship between both parties. Practical implications Providing insights into the relationship building process and best practices, this study helps reduce the knowledge and empathy gap that exists between FBs and PE. Originality/value The results clarify the need to reconcile an agency and stewardship perspective to thoroughly understand the relationship and behaviour of FBs and PE investors, and to help the parties understand and benefit from each other’s added value.

Motivated by the growing attention to the financing decisions of family firms, this review brings together the two highly relevant research fields of family business and finance. This study critically reviews 131 articles on financing decisions in family businesses, published between 1977 and 2016 in 64 finance and management journals. We develop a state of the art on family business financing literature and present a model to guide extant and future research by identifying gaps across the theoretical perspectives and across context-specific elements such as family business heterogeneity and country-specific factors. The author(s) received no financial support for the research, authorship, and/or publication of this article.

This study investigates the effect of both family-centered goals and family board representation (family member representation on the board of directors) on family firm capital structure. Based on a sample of 327 Belgian family SMEs, our findings show that family-centered goals indirectly affect the total debt rate through family board representation. More specifically, the results indicate that this mediating effect holds primarily for the short-term (vs. long-term) debt rate and for the financial (vs. nonfinancial) debt rate. Taken together, our findings suggest that the socioemotional wealth (SEW) perspective is relevant and fruitful to explain debt decisions in family firms. Our findings contribute to family business literature and enable scholars and practitioners to gain a better understanding of family firm capital structure decisions.

Based on a sample of 425 SMEs, we investigate whether intergenerational differences affect the capital structure and growth behavior of family firms. We integrate the financing and growth relation into our research by using a 2SLS approach and the internal and sustainable growth concepts. Evidence is found that the capital structure is not directly influenced by the managing generation, but indirectly through the realized growth rate. Moreover, results indicate that next–generation companies grow slower because they have the tendency to forego part of their growth rather than risk the loss of family control due to the increased use of debt.

In this article the authors study the impact of a family business transfer on the financial structure and performance based on a sample of 152 small- to medium-sized businesses. The aim is to identify the effects of a succession by relying on panel data gathered over the period 1991 to 2006 resulting in more than 2,000 firm–year observations. The main findings are that a transfer from the first to the second generation negatively influences the debt rate of the company, whereas in successions between later generations this effect is reversed. With respect to firm growth, analyses indicate that in first-generation companies the growth rate decreases after the transition, whereas in next-generation firms no effect on the growth level can be identified. Finally, no evidence is found that a family firm's profitability is affected by succession, which shows that a transfer should not necessarily be seen as a negative event in the life cycle of a family business.

The studies on the relationship between the depth of the entrepreneur's experience and firm growth shows inconsistent and inconclusive results. A comprehensive understanding of this matter is especially valuable in the context of family business successions, given that many companies seem to be unsuccessful in conquering the difficulties surrounding a succession. The reason is the fact that successors often lack experience when taking over the company. Based on a sample of 511 small family firms, our results suggest a positive and curvilinear effect of CEO experience on firm performance. Experience is contributive to the growth in value added up to a certain number of years that the CEO is in a CEO position, after which it becomes counterproductive. Firms with CEOs currently holding multiple directorships are also found to generate significantly higher performance levels and that growth rates appear to lessen according to the age of the CEO.

This study aims to increase our understanding of the competencies that are and should be used by family CEOs to achieve success for both the family and business. This quantitative study is based on a survey among family CEOs in Belgian family firms. The results show that the use by the family CEO of family business system competencies significantly increases the financial performance of the company as well as the performance of the family. Notwithstanding this result, it is striking that many family CEOs give little priority to using these family business system competencies compared with other competencies in managing the family business.