• Are family firms good employers?

      Neckebrouck, Jeroen; Schulze, William; Zellweyer, Thomas (Academy of Management Journal, 2018)
      Family firms employ about 60 percent of the global workforce. While it is widely assumed that they are good employers, data about their conduct is mixed. In this study, we extend stewardship and agency theories to test competing propositions about the impact of family on employment practices using data from 14,961 private Belgian firms over a 19-year period. Higher investments, lower dividend payout, and higher risk tolerance indicate that family firms are better financial stewards of their companies than nonfamily firms. However, family firms are worse organizational stewards than nonfamily firms: They offer lower compensation, invest less in employee training, and exhibit higher voluntary turnover and lower labor productivity. Further, and contrary to earlier research, we find that financial practices in private family firms do not change over time, and that the deleterious influence of family on employment practices rises with both firm age and with heightened family involvement. Together, our findings suggest that a more nuanced understanding of stewardship and agency theory is needed to understand the impact of family on the governance of private firms.
    • Attitudes of family firms toward outside investors: The importance of organizational identification

      Neckebrouck, Jeroen; Manigart, Sophie; Meuleman, Miguel (2018)
      More and more family firms open their capital for outside investors, yet existing studies mainly conclude that family firms are more reluctant than nonfamily firms to hand over control to outside investors. In this study, we build on an organizational identification perspective to explore why family firms differ in their attitudes toward outside investors. We hypothesize that family members who identify strongly with their firms are less willing to cede control to outside investors and, if they do cede control, have a stronger preference for investors who may readily identify with family firms, such as family offices or high net worth individuals, rather than investors who may not fit well with a familial identity, such as private equity sponsors or financial investors. We also hypothesize that social identification mediates the relationship between important family firm governance characteristics and preferences for outside investor. Exploratory evidence from a sample of Belgian family firms is supportive of most of our predictions.
    • Attitudes of family firms towards external investors: The importance of organizational identification

      Neckebrouck, Jeroen; Manigart, Sophie; Meuleman, Miguel (Venture capital, 2017)
      More and more family firms open their capital for outside investors, yet existing studies mainly conclude that family firms are more reluctant than nonfamily firms to hand over control to outside investors. In this study, we build on an organizational identification perspective to explore why family firms differ in their attitudes toward outside investors. We hypothesize that family members who identify strongly with their firms are less willing to cede control to outside investors and, if they do cede control, have a stronger preference for investors who may readily identify with family firms, such as family offices or high net worth individuals, rather than investors who may not fit well with a familial identity, such as private equity sponsors or financial investors. We also hypothesize that social identification mediates the relationship between important family firm governance characteristics and preferences for outside investor. Exploratory evidence from a sample of Belgian family firms is supportive of most of our predictions.
    • Entrepreneurial Buyout Monitor. A clear view on investment results 2013 - outlook 2014

      Meuleman, Miguel; Neckebrouck, Jeroen (2014)
      Welcome to the first edition of the Entrepreneurial Buyout Monitor – a snapshot of the trends and challenges involved in management buyouts and buy-ins of SMEs in Belgium from a practitioner’s perspective. We captured the opinion of 175 buyout experts in Belgium – including bankers, private equity players, lawyers, brokers and M&A advisers. There has been a general lack of understanding and transparency of the smaller segment of the buyout market. Here, we give insights and trends on the general investment climate for SME buyouts, including: 1) Deal flow 2) Deal-making 3) Financing Overall, the results indicate the investment climate has generally improved and this is expected to continue in 2014. The key insights from the survey are: 1) Deal flow is increasing – but with greater levels of competition and a lack of professionally run SMEs with the potential to be transferred, sourcing high-quality deals remains challenging 2) Lending conditions continue to be challenging – putting pressure on investment returns and urging investors to look for alternative deal structures 3) Investors have to be more proactive – focusing on targets with the potential to add value through cutting costs or pursuing growth opportunities 4) Potential vendors need to be realistic – and either adjust their price expectations or wait for improved operating results and an uplift in multiples when the economic climate improves
    • Governance implications of attracting external equity investors in private family firms

      Neckebrouck, Jeroen; Meuleman, Miguel; Manigart, Sophie (Academy of Management Perspectives, 2021)
      While research commonly assumes business-owning families are concerned about the preservation of control, more and more families seek cooperation with external investors to accomplish firm- and/or family level-goals. In this paper, we provide a conceptual configuration of the different governance scenarios that may arise when family owners attract outside capital. Combining two important family objectives - the objective to provide liquidity either to the family or to the firm, and the objective to cede or to retain long-term family control - we identify four scenarios with different governance implications and preferred types of external investors. Our analysis contributes to an increased understanding of the evolving structures of ownership in private family firms, the effectiveness and efficiency of governance arrangements in family firm-external investor cooperations and the increasingly heterogeneous private equity funding landscape.
    • Private Equity: zinvol voor familiebedrijven?

      Neckebrouck, Jeroen (CxO Magazine, 2017)
    • When the going gets tough: Private equity firms' role as agents and the resolution of financial distress in buyouts

      Meuleman, Miguel; Wilson, N.; Wright, M.; Neckebrouck, Jeroen (Journal of Small Business Management, 2020)
      Previous research has focused on a private equity (PE) firm’s role as principal in its relationship with the investee, but few studies have looked into their role as agents to their investors. We examine how a PE firm’s relationship as agent toward limited partners (LPs) and banks influences its incentives to resolve financial distress in the investee. We examine the effect of PE fundraising reputation, PE fundraising activity, and PE bank affiliation on the likelihood of a financially distressed buyout ending in bankruptcy. We build a unique dataset of 338 distressed buyouts in the UK to test our hypotheses.
    • When two worlds collide: Employement decisions in private-equity backed family firms

      Neckebrouck, Jeroen; Manigart, Sophie; Meuleman, Miguel (2016)
    • Working for divergent principals: Effects of private equity on employment practices in family firms

      Neckebrouck, Jeroen; Neckebrouck, Jeroen; Manigart, Sophie; Meuleman, Miguel (2016)
    • Working for divergent principals: effects of private equity on employment practices in family firms

      Neckebrouck, Jeroen; Manigart, Sophie; Meuleman, Miguel (2016)
      This research increases understanding of agency theory by exploring the influence of divergent principal interests in private firms. Investigating unique panel data on employment levels and employment terms in private equity backed family firms (from 1996 to 2013), findings reveal that, when private equity investors acquire minority positions, family control strongly weakens the positive impact of private equity on employment levels. Alternatively, when private equity investors acquire full control, employment levels increase more in previously family controlled firms compared to nonfamily firms. Results further show that neither majority nor minority private equity investments induce significant changes in employment terms such as wages or the usage of temporary contracts, yet highlight some important selection effects. These results hold broad implications for family firms, private equity investors and policy makers.