Abstract
The academic literature on family business has devoted a lot
of attention to define the uniqueness of family firms, in terms
of the specific features which differentiate them from other
businesses, and to investigate how the presence of the family
in the business (family ownership, family involvement in the
board or in the management) may have an impact on the
performance of the business.
But what are the practical insights that the professional valuer
can take away and put in practice when she performs the
valuation of a privately held family firm?
Drawing from their academic and professional backgrounds
the Authors tentatively try to answer highlighting some specific areas where further research may be needed:- Family premium or discount? Is it possible to
translate into a measure of value the outperformance
/ competitive advantages of family
business often emphasized by specialized academic
journals?
- Does the strong influence of the family on the
business expose the firm to some additional
risk and how these risks can be gauged?
- Are there any specific valuation biases in the
family business context?
The study suggests that:
- It is not possible to argue in absolute terms that
the market should assign a premium or a discount
to family firms, despite of what the academic
literature tentatively shows about family
businesses over-performing their non-family
counterparts (but with mixed and inconclusive
results especially in the subset of private firms);
- A relevant contribution from the literature, in
the professional valuer’s perspective, comes
from the identification of the factors that
can make the family a benefit or a hazard for
the business (the dark side vs the bright side
of family business);
- Some quantitative analysis may be useful in
order to better understand how the specific
characteristics of family firms may influence
their riskiness in particular in the perspective
of a potential acquirer, discriminating between
a minority vs majority stake deal.
Finally, as long as the valuation is a cognitive
and social process aimed at giving an opinion, it
appears that in the context of family businesses
some cognitive biases could play a part, somewhat
distorting the neutral and balanced assessment
of the firm’s value by the expert in charge:
confirmation bias, halo effect and anchoring.
Lingua originale | Inglese |
---|---|
pagine (da-a) | 35-52 |
Numero di pagine | 18 |
Rivista | REVISTA ESPAÑOLA DE CAPITAL RIESGO |
Numero di pubblicazione | 3 |
Stato di pubblicazione | Pubblicato - 2014 |
Keywords
- Family business - Firm Valuation