The role of family influence in M&A transactions

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Family-affiliated firm owners are often characterized by poorly diversified portfolios, control over senior management, and a focus on non-pecuniary benefits. These traits can lead to increased agency costs due to conflicts of interest between minority shareholders and blockholding families. However, recent studies and capital market indices, such as the German Entrepreneurial Index (GEX), indicate that family businesses may outperform their non-family counterparts. The ongoing debate centers on whether family businesses prioritize the interests of all shareholders. This dissertation aims to clarify if agency conflicts in family firms are a significant issue or if family influence serves as a competitive advantage for all shareholders. By analyzing Merger & Acquisition (M&A) transactions involving public German family and non-family firms, the research investigates these value effects. Findings reveal that greater family influence does not exacerbate inefficiencies, such as agency costs between minority and majority shareholders. Instead, family firms demonstrate shareholder value-maximizing behavior. The results suggest that family businesses possess distinct patterns and performance advantages in external growth strategies, indicating that "familyness" can be a sustainable competitive advantage.