Powerful or powerless? Private equity as financial instrument in family firms and nonfamily firms

This paper examines differences between family and nonfamily firms of 75 privately held German firms backed by PE. Results show that family firms and nonfamily firms mainly use PE to finance growth strategies. Differences between both groups exist as family firms cede less company control to PE firms than nonfamily firms when entering a PE transaction. Almost half of the examined PE-transactions are free of conflicts and CEOs trust PE-Managers on a moderate to high level.