Stakeholder relations as an asset in family firms - Performance effects of changes after PE investment

By building upon instrumental stakeholder theory, we aim to increase academic understanding of how changes in stakeholder relations affect acquisition performance outcomes in a private equity (PE) family firm buyout, during the holding period. With our sample of 134 PE -backed family firm buyouts, we find evidence to suggest that reducing social engagement during the holding period decreases medium -term performance, whereas the termination of existing supplier relationships affects this positively. Moreover, our data suggests that effects concerning the reduction of social engagement and employee downsizing are negatively moderated by increased levels of family ownership prior to the PE deal.