Two Sides of the Same Coin: Family Firms and the Performance of Acquisitions and Divestitures
This paper explores how the characteristics of both the acquiring and divesting ﬁrms in a given transaction affects the acquiring and divesting ﬁrms’ performance. Using family ﬁrms as the context, this paper documents that the shareholder returns to acquiring ﬁrms are highest when family ﬁrm acquirers buy businesses from non-family ﬁrm divesters, and the shareholder returns to divesting ﬁrms are highest when family ﬁrm divesters sell businesses to non-family ﬁrm acquirers. These ﬁndings reveal that it is necessary to consider the characteristics of both the acquiring and divesting ﬁrms in a given acquisition or divestiture when evaluating each ﬁrm’s ﬁnancial performance, and that family ﬁrm shareholders only gain economic value in acquisitions or divestitures where their counterparties are not also family ﬁrms.
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