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The Sale of the family business-entrepreneurial project, strategic decision, or expropriation

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Although the sale of your family's business has always been considered an alternative for what reason ever to the ongoing fight for surviving, the sale of the family business and its effect onto family members and the family as a system have nearly not been researched. In discussions with family business owners as well as with academics and consultants the sale of the family business was viewed as an easy way out. "Most of the scholars in the family business field in many ways regard the sale of a family company as a failure,.." (Pellegrin 1999, Pp. 1) Watching the market of private banking, wealth management and consulting for what is now more than a decade it becomes obvious that this must not be true. Selling a family business has in-depth effects onto individual family members and to the family as a system. It is the way out of one system into another one that the selling family members do not know yet and that therefore bears not only opportunities but also risks. For business-owning families, ownership is a key to control their companies, and a central instrument for developing their family's wealth. Following the ownership rights these families often manage their own companies. In these cases the company is not only a relevant asset of the family's wealth but it also structures the family's life which is organised around it. The leading question of this research project is "What conditions do lead to the sale of a family business? Are there patterns that are not only consistent but that also help to predict and maybe even to avoid the sale of the family's business? How does the sale of the family business affect these families? Which questions come up after the sale and how can they be addressed appropriately? Under which conditions and mediating factors are questions more or less important and more or less complicated to answer?" This study consists of three main parts: the theoretical background, the empirical study, and the development of a theory of the sale of the family business. In the theoretical part relevant concepts are defined, the process of the sale and after-sale of the family business are shown as a part of the overall development of the business family. Because of the applied methodology which is based on grounded research theory (Glaser and Strauss 1967; Strauss and Corbin 1990) there will be no literature review to start with. Instead, results from literature will be incorporated in the third part discussing the results of the empirical study. This empirical study will be described in the second part. Based on the outcome of the empirical study a theory will be outlined to describe patterns of the sale and their effects onto the family members and the family system.

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2004/2004-25.pdf

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Copyright INSEAD. All rights reserved