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Adopting an integrated agency and stewardship perspective, the purpose of this paper is to understand the relationship between family businesses (FBs) and private equity (PE) investors at three stages: entry, cooperation, and exit.

This qualitative study combines the perspectives of 11 FB owners and/or managers, seven PE investors, and four intermediaries. The in-depth interviews of this purposive sample are analysed at the intra- and inter-case level using a template analysis approach up to reaching theoretical saturation.

Building and maintaining an effective relationship between the FB and the PE investor requires both a stewardship perspective (i.e. reciprocal principal-steward behaviour) and a necessary but insufficient agency perspective (i.e. principal-principal behaviour).

More large-scale studies with an integrated agency-stewardship perspective on FBs using PE can increase the external validity of the insights from this research to build and maintain an effective relationship between both parties.

Providing insights into the relationship building process and best practices, this study helps reduce the knowledge and empathy gap that exists between FBs and PE.

The results clarify the need to reconcile an agency and stewardship perspective to thoroughly understand the relationship and behaviour of FBs and PE investors, and to help the parties understand and benefit from each other’s added value.