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Family firm perceptions and investment decisions: An experimental conjoint analysis of private equity investors

Sören Paleit et al.

Journal of Family Business Strategy2025https://doi.org/10.1016/j.jfbs.2025.100672article
AJG 2ABDC B
Weight
0.37

Abstract

This study investigates the perceptions private equity (PE) investors have of family firms and how these perceptions affect their investment decisions. We conducted a conjoint analysis using primary data concerning 1656 decisions made by 207 PE investors (Study 1), and additional post hoc data concerning 1672 decisions made by 209 PE investors (Study 2). Our analysis explores how perceived potential for value-creation influences the likelihood of an investment target being identified as a family firm, and the subsequent investment decisions. The results indicate that perceiving a firm to be a family firm significantly increases the likelihood of investment. This increase is driven by positive assessments of value-creation potentials, such as margin growth potential, multiple expansion potential, and cash conversion potential. Furthermore, we find that the deal experiences of PE investors moderate these baseline relationships, highlighting the crucial role of investor characteristics in shaping perceptions and investment decisions with regard to family firms. • This paper reports findings from two conjoint studies involving more than 400 private equity (PE) professionals. • Data suggests that PE professionals are of the opinion that family firms have greater potential for value creation. • These opportunities for value creation include margin growth, multiple expansion and cash conversion potential. • However, the more experienced the PE professional is, the lower the value creation potential is estimated to be.

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https://doi.org/https://doi.org/10.1016/j.jfbs.2025.100672

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@article{sören2025,
  title        = {{Family firm perceptions and investment decisions: An experimental conjoint analysis of private equity investors}},
  author       = {Sören Paleit et al.},
  journal      = {Journal of Family Business Strategy},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1016/j.jfbs.2025.100672},
}

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Family firm perceptions and investment decisions: An experimental conjoint analysis of private equity investors

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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