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Article
Publication date: 1 February 2000

Mike Wright, Ken Robbie and Mark Albrighton

This paper provides an exploratory examination of the growing phenomenon of secondary management buy‐outs and buy‐ins, where an enterprise having initially been bought out…

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1468

Abstract

This paper provides an exploratory examination of the growing phenomenon of secondary management buy‐outs and buy‐ins, where an enterprise having initially been bought out by management is later the subject of a second buy‐out or buy‐in. Such transactions provide a further dimension to the exit opportunities available to venture capital investors and also to the maintenance of independent entrepreneurial businesses. The paper uses large scale data to test propositions relating to the expected differences between secondary buy‐outs and buy‐ins and buy‐outs and buy‐ins in general as well as detailed case study evidence from entrepreneurs and venture capitalists to examine the rationale for such transactions. The quantitative data suggest that secondary buy‐outs and buy‐ins are more likely to involve enterprises in traditional industrial sectors and are significantly more likely to occur a longer time after the initial buy‐out than are trade sales or flotations. The case study evidence reveals that secondary buy‐outs and buy‐ins can arise for various reasons but are rarely the first choice exit route for venture capitalists, though they provide a means by which entrepreneurs can maintain the enterprise’s independent private existence.

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International Journal of Entrepreneurial Behavior & Research, vol. 6 no. 1
Type: Research Article
ISSN: 1355-2554

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Article
Publication date: 18 May 2010

Susanne Durst and Stefan Gueldenberg

Taking company succession as an alternative means of embarking on an entrepreneurial activity, the aim of this study is to explore those intangible assets that are

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1490

Abstract

Purpose

Taking company succession as an alternative means of embarking on an entrepreneurial activity, the aim of this study is to explore those intangible assets that are regarded as attractive from the viewpoints of external successors. Thereby, the focal point is on the preparation stage in which promising companies are identified and scrutinised.

Design/methodology/approach

The strategy of research behind this paper is the application of a mixed methods approach that is divided into an internet‐mediated questionnaire and a series of in depth interviews (given priority).

Findings

The findings suggest that intangible assets have a notable influence on the intention of an external successor to take over a company. This would suggest that the traditional issues considered with regard to company succession, such as tax, legal and financial aspects, should be extended to include intangible aspects. The findings are summarized by proposing a framework for the role of intangibles in external succession, thereby highlighting critical intangibles as perceived by external successors.

Research limitations/implications

This explorative study is by no means exhaustive; however it is regarded as a valuable fundament for further research activities associated with the role of intangible assets in terms of company succession, particularly external succession.

Practical implications

The framework appears to be a valuable tool for understanding the importance of intangibles in external company succession in general and particularly their influence on external successors' business acquisition intentions. The findings are particularly considered as helpful for incumbent‐owners who plan to sell off their companies.

Originality/value

The study's findings can be viewed as a new perspective on company succession as it highlights the intangible assets that make a company attractive to external successors. Given the increasing number of small to medium‐sized enterprises waiting to be transferred to new owners, these findings are highly important as they provide a more holistic view of the dynamics of company succession (and external succession in particular).

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VINE, vol. 40 no. 2
Type: Research Article
ISSN: 0305-5728

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Article
Publication date: 1 April 1996

Gordon Murray

Provides evidence on the capital search process by entrepreneurial managers, focusing on the means by which managers undertaking management buy‐outs and buy‐ins identify…

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1234

Abstract

Provides evidence on the capital search process by entrepreneurial managers, focusing on the means by which managers undertaking management buy‐outs and buy‐ins identify and select professional intermediaries and venture capitalists. Discusses the marketing implications of the study’s findings.

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International Journal of Bank Marketing, vol. 14 no. 2
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 1 May 1992

Ken Robbie and Gordon Murray

As the venture capital industry matures and competition increases,understanding the processes by which entrepreneurs select venturecapitalists will become increasingly…

Abstract

As the venture capital industry matures and competition increases, understanding the processes by which entrepreneurs select venture capitalists will become increasingly important. Empirical work suggests that awareness of venture capital firms is still low and that the specialist financial and legal advisers have an important role to play in guiding the flow of proposals to venture capitalists.

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International Journal of Bank Marketing, vol. 10 no. 5
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 15 January 2020

Alexander Poeschl and Joerg Freiling

The purpose of this paper is to explore the under-researched family-external business succession process. It makes use of entrepreneurship theory in order to conceptualize…

Abstract

Purpose

The purpose of this paper is to explore the under-researched family-external business succession process. It makes use of entrepreneurship theory in order to conceptualize this temporal process. This allows for an operationalization of entrepreneurial functions and tracking them during the two main phases of such processes. This study provides a starting point for further endeavors into researching family-external succession processes.

Design/methodology/approach

This paper is based on an explorative, quasi-longitudinal, qualitative and multiple case-study approach. It became possible to create trust with stakeholders in three family firms and to conduct face-to-face interviews with a total of 12 interviewees, generating over 300 transcript pages. The case interviews were validated through two expert interviews. A priori research propositions were tested and modified, if deemed necessary.

Findings

Entrepreneurial functions during the two main phases of the process seem to be carried out and aligned depending on several influencing factors: delegation of responsibilities from owner-managers to qualified employees; incumbent owner-managers being heavily involved in the succession’s facilitation and neglecting some entrepreneurial functions; and as a result new owner-managers being forced to prioritize certain functions in the second phase.

Originality/value

This paper benefits from a rather unique access to three family firms undergoing succession in the DACH-region. Therefore, it became possible to study the family-external succession process by including various stakeholders involved. Such an inclusion of perspectives has been suggested by family business scholars for a long time.

Details

Journal of Organizational Change Management, vol. 33 no. 1
Type: Research Article
ISSN: 0953-4814

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Article
Publication date: 31 May 2013

Martin R.W. Hiebl, Birgit Feldbauer‐Durstmüller and Christine Duller

The purpose of the present paper is to investigate whether the transition from a family business to a non‐family business affects the institutionalisation of management accounting.

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3458

Abstract

Purpose

The purpose of the present paper is to investigate whether the transition from a family business to a non‐family business affects the institutionalisation of management accounting.

Design/methodology/approach

This paper is based on an online survey among all large and medium‐sized Austrian firms. Univariate and multivariate statistical analyses were used to test the impact of the level of family influence on aspects of the institutionalisation of management accounting. Firm size is included as the main control variable.

Findings

A lower level of influence from the controlling family was found to be correlated with the institutionalisation and intensification of management accounting in medium‐sized firms. For large firms, such a linear relationship could not be drawn. The level of education of management accountants was inversely correlated with the level of family influence in both large and medium‐sized firms.

Research limitations/implications

Further research into the reasons, underlying drivers and inter‐organisational promoters of management accounting change in family businesses is needed. Furthermore, the organisational impacts of the transition from family businesses to non‐family businesses deserve further investigation.

Originality/value

A framework for assessing the organisational effects of the transition from family businesses to non‐family businesses is provided. The empirical results on the impact of the transition on the institutionalisation of management accounting are presented. The level of family influence was found to act as a significant contextual factor for the organisation of management accounting in medium‐sized firms.

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Journal of Accounting & Organizational Change, vol. 9 no. 2
Type: Research Article
ISSN: 1832-5912

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Article
Publication date: 24 September 2018

Anupama Singh and Sumi Jha

The purpose of this paper is to develop a comprehensive organizational health (OH) framework for business organizations. The framework will present the antecedent-OH…

Abstract

Purpose

The purpose of this paper is to develop a comprehensive organizational health (OH) framework for business organizations. The framework will present the antecedent-OH relationship with employee well-being (EWB) as a mediator.

Design/methodology/approach

The present study conducted a cross-sectional study using case study approach in which concurrent triangulation design was followed, and the collection of qualitative as well as quantitative data was conducted concurrently. A total of 441 structured survey questionnaires and 21 semi-structured in-depth interviews were collected from 10 laboratories of an Indian R&D organization.

Findings

The findings showed that EWB acts as a mediator in an antecedent-OH relationship supporting the full mediation model.

Research limitations/implications

The findings are limited to only R&D organizations. This framework can help organizations in establishing a proper communication channel and reducing occupational stress among employees by empowering the employees. Empowerment practices foster conditions which help the employee feel good about their job which shall help in enhancing EWB thereby, promoting culture for OH.

Originality/value

It is an attempt to conceptualize the concept of OH in business sector similarly as in the case of OH in the education sector.

Details

South Asian Journal of Business Studies, vol. 7 no. 3
Type: Research Article
ISSN: 2398-628X

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Article
Publication date: 22 February 2008

Louise Scholes, Paul Westhead and Andrew Burrows

This exploratory study aims to provide fresh insights into the ownership transfer of private family firms through internal management buy‐out (MBO) and external management

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3762

Abstract

Purpose

This exploratory study aims to provide fresh insights into the ownership transfer of private family firms through internal management buy‐out (MBO) and external management buy‐in (MBI) succession routes. The paper aims to explore if flows of information impact the succession planning process and if the nature of succession planning impacts the business sale negotiation process relating to family firms that select MBO/MBI succession routes.

Design/methodology/approach

Guided by insights from agency theory and theories relating to information asymmetries and negotiation behaviour six hypotheses were derived. Private family firms that had received venture capital and the MBO/I deals had been completed between 1994 and 2003 were identified. A structured survey was administered to 117 senior members of acquiring MBO/I management teams after the deal had been completed in several European countries. Non‐parametric chi‐square tests and Mann‐Whitney “U” tests were used to test the presented hypotheses.

Findings

Evidence highlights the importance of information sharing and that the family owner(s) may not always be in the strongest position. MBOs reported lower information asymmetry. Also, lower information asymmetry was reported when vendors and management were involved in succession planning. Internal managers with greater access to information were found to influence the negotiation process and determine who is more likely to benefit from the price to be paid for the firm. A mutually agreed price was less likely when management controlled information and when personal equity providers (PEP) were involved in the process supporting the interests of the MBO/I team.

Practical implications

Family firm owners need to plan for succession planning. Vendors of family firms need to leverage external professional advice when negotiating the sale of their ventures to ensure “family agendas” are protected.

Originality/value

This study has extended the conceptual work of Howorth et al. surrounding the succession of family firms through MBOs and MBIs. Rather than relying on case study evidence alone, cross‐sectional survey evidence was explored within a univariate statistical framework to explore gaps in the knowledge base relating to succession planning and business sale negotiation behaviour.

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Journal of Small Business and Enterprise Development, vol. 15 no. 1
Type: Research Article
ISSN: 1462-6004

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Article
Publication date: 1 July 2006

Barry Ip and Gabriel Jacobs

This article aims to review business and academic literature on the topic of business succession planning (BSP). The purpose is to allow the vast quantity of evidence and…

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17954

Abstract

Purpose

This article aims to review business and academic literature on the topic of business succession planning (BSP). The purpose is to allow the vast quantity of evidence and opinion to be contextualised, and enable a better understanding of the key themes within BSP, particularly with respect to small, family‐owned businesses.

Design/methodology/approach

An extensive literature search of business magazines, journal databases, textbooks, and relevant reports and citations was carried out. A categorisation of the evidence, involving over 400 articles, allowed informed discussions on the key themes surrounding BSP.

Findings

Key findings include family succession, legal, financial, and fiscal components, barriers against implementation, and methods for managing the process. A detailed summary of these and other topics is given, which together constitute the critical themes which should be borne in mind by businesses facing BSP.

Research limitations/implications

The main weakness of this paper is the lack of theoretical development. However, the findings prompt key areas for future research, and help to contextualise the topic for any potential new developments in succession planning.

Practical implications

Despite the need for further scientific and validated studies, businesses are urged to devote sufficient resources and attention towards succession to promote long‐term survival and prosperity.

Originality/value

This paper allows researchers and business practitioners to obtain a wholesome reflection on the key themes within BSP, which are often exacerbated by the sheer volume of diverse opinion. The value of this paper is that it amalgamates the available evidence and offers a detailed, informed insight into the current state of research and practice in business succession.

Details

Journal of Small Business and Enterprise Development, vol. 13 no. 3
Type: Research Article
ISSN: 1462-6004

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Article
Publication date: 1 October 2006

Anne‐Laure Le Nadant and Frédéric Perdreau

Seeks to investigate whether the financial characteristics of leveraged buy‐out (LBO) targets differ from those of firms that have not undergone an LBO before the deal…

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1374

Abstract

Purpose

Seeks to investigate whether the financial characteristics of leveraged buy‐out (LBO) targets differ from those of firms that have not undergone an LBO before the deal. Specifically, to examine the free cash flows (FCFs), income taxes, capital intensity, business risk, profitability, financial structure and asset characteristics of 175 French LBO targets that are mainly privately held and rather small companies, between 1996 and 2002.

Design/methodology/approach

Predictions derive from the FCF and the tax savings hypotheses, and from the criteria used by LBO firms in their acquisition rationale. Tests were conducted of differences between LBO targets and control companies and logit regressions run.

Findings

Results show that LBO targets are less indebted, have more liquid (financial) assets, and exhibit higher business risk than their industry counterparts. A distinction between LOBs according to the vendor type shows that independent companies are smaller, more profitable, and have higher tax income levels, whereas former subsidiaries or divisions of groups are less profitable, and have more financial assets than their industry counterparts. Logit regressions suggest that LBOs of smaller independent targets that LBOs of smaller independent targets fit fiscal and succession motives, whereas LBOs of former subsidiaries address management issues.

Research limitations/implications

The likelihood of an LBO is related to accounting ratios only. Further research could include other financial or strategic variables in the models.

Practical implications

The unexpected risky profile of targets has implications for LBO firms.

Originality/value

A new result is the risky profile of LBO targets prior to the deal. This could help to explain the underperformance puzzle after the deal already emphasized on the French market.

Details

Review of Accounting and Finance, vol. 5 no. 4
Type: Research Article
ISSN: 1475-7702

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