Ann-Kristin Achleitner, Christian Figge and Eva Lutz
The purpose of this paper is to identify specific drivers of value creation in secondary buyouts. While this type of private equity deal has risen in importance in recent years…
Abstract
Purpose
The purpose of this paper is to identify specific drivers of value creation in secondary buyouts. While this type of private equity deal has risen in importance in recent years, it is not yet well understood. Through an in-depth analysis of the acquisition of Brenntag by BC Partners, we develop propositions on the value creation profile of secondary buyouts.
Design/methodology/approach
We use a single case study design to explore the information-rich context of a secondary buyout. The Brenntag case epitomizes the development of a company from forming part of a large conglomerate to being private-equity owned after the primary and secondary buyout, to its final disposition of public listing. Our analysis is based on ten semi-structured interviews with key protagonists and observers, as well as analysis of primary company data and additional secondary data sources.
Findings
We propose that even if the investment management and monitoring skills of the primary and secondary private equity group are similar, there is still potential to realize operational improvements in a secondary buyout, due to either early exit of the primary private equity group or measures that further enhance management incentives. In addition, the Brenntag case shows that low information asymmetries can lead to higher leverage and that opportunities for multiple expansions are limited in secondary buyouts.
Originality/value
While a secondary buyout has become a common exit route in recent years, we are the first to undertake an in-depth case analysis of a secondary buyout. Our study helps researchers and practitioners enhance their understanding of drivers behind the value creation profile of secondary buyouts.
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Eva Lutz and Stephanie Schraml
The purpose of this paper is to examine motives for hiring a non‐family Chief Financial Officer (CFO) in family firms. The authors explore the perceptions of family firm owners…
Abstract
Purpose
The purpose of this paper is to examine motives for hiring a non‐family Chief Financial Officer (CFO) in family firms. The authors explore the perceptions of family firm owners towards external managers by analyzing how their goals relate to the employment of a non‐family CFO.
Design/methodology/approach
This study is based on a survey of 195 small‐ and medium‐sized privately‐held German family firms. It investigates the relationship between goals of the family and the employment of a non‐family CFO.
Findings
Family firm owners decide against an external CFO when their goal of independence and control is high. Furthermore, they do not seem to trust external managers to act in accordance with their goal of enterprise value growth. However, they seem to realize that non‐family CFOs are likely to decrease financial risk through the provision of additional capabilities.
Originality/value
The findings are relevant to understand the relationship between external managers and family firm owners. By employing a non‐family CFO, family firm owners give away part of the control, but they can also gain additional valuable input and potentially lower their financial risk. They should however put effort into setting up appropriate incentive structures for the manager.
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Ann‐Kristin Achleitner, Eva Lutz, Kerry Herman and Josh Lerner
The purpose of this paper is to present a case study of UK fashion retailer New Look and focuses on the impact of private equity on corporate governance, employment and leverage…
Abstract
Purpose
The purpose of this paper is to present a case study of UK fashion retailer New Look and focuses on the impact of private equity on corporate governance, employment and leverage after the public‐to‐private conversion in 2003.
Design/methodology/approach
This study follows a case study approach to offer in‐depth insights into the role of different parties in the deal and their perceptions. The case study is based on semi‐structured interviews with key management of New Look, partners of the private equity firms and other members of the New Look board. In addition, complements the analysis with secondary sources (e.g. analyst reports, published articles and financial data of New Look) in order to triangulate our findings.
Findings
The case presents an example of a company that pursued a public‐to‐private transaction with the support of private equity firms. The envisioned transformation process post‐transaction turned out to be highly successful with increasing efficiencies and profits as well as an increase of over 3,500 employees over four years. This paper analyses key success drivers and the role of the private equity firms in achieving this success.
Originality/value
The paper is the first in‐depth case study of a European public‐to‐private transaction with support of private equity that offers rich evidence on the impact of private equity on corporate governance, employment and leverage.
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Alexandra Moritz, Joern Block and Eva Lutz
This study’s aim is to investigate the role of investor communication in equity-based crowdfunding. The study explores whether and how investor communication can reduce…
Abstract
Purpose
This study’s aim is to investigate the role of investor communication in equity-based crowdfunding. The study explores whether and how investor communication can reduce information asymmetries between investors and new ventures in equity-based crowdfunding, thereby facilitating the crowd’s investment decisions.
Design/methodology/approach
This paper follows an exploratory qualitative research approach based on semi-structured interviews with 23 market participants in equity-based crowdfunding: 12 investors, 6 new ventures and 5 third parties (mostly platform operators). After analyzing, coding and categorizing the data, this paper developed a theoretical framework and presented it in a set of six propositions.
Findings
The results indicate that the venture’s overall impression – especially perceived sympathy, openness and trustworthiness – is important to reduce perceived information asymmetries of investors in equity-based crowdfunding. To communicate these soft facts, personal communication seems to be replaced by pseudo-personal communication over the Internet (e.g. videos, investor relations channels and social media). In addition, the communications of third parties (e.g. other crowd investors, professional and experienced investors and other external stakeholders) influence the decision-making process of investors in equity-based crowdfunding. Third-party endorsements reduce the perceived information asymmetries and lower the importance of pseudo-personal communications by the venture.
Originality/value
Prior research shows that investor communication reduces information asymmetries between companies and investors. Currently, little is known about the role of investor communication in equity-based crowdfunding. This study focuses on the role of investor communication to reduce the perceived information asymmetries of investors in equity-based crowdfunding.
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This paper aims to investigate German bank-affiliated venture capitalists’ investment practices and the emergence of their investment logics. Most studies focus on the investment…
Abstract
Purpose
This paper aims to investigate German bank-affiliated venture capitalists’ investment practices and the emergence of their investment logics. Most studies focus on the investment behaviour of independent venture capitalists and little is known about dependent venture capitalists’ investment behaviour. The present study contributes to filling this gap in entrepreneurial finance literature.
Design/methodology/approach
The paper uses an exploratory qualitative research approach based on 27 semi-structured interviews with the top management of German bank-affiliated venture capitalists and industry experts to develop a conceptual model that explains the investment logics of bank-affiliated venture capitalists. A large amount of archival data has also been collected and used for the analysis.
Findings
The results indicate that bank-affiliated venture capitalists either follow an autonomous, contingent or hybrid investment logic. A bank-affiliated venture capitalist’s isomorphic focus – whether they feel isomorphic to the external venture capital environment or the internal parent bank’s environment – explains the emergence of multiple investment logics.
Practical implications
The paper encourages banks to get a better understanding of how the venture capital industry works and what they need to do to compete again independent venture capitalists. Banks and their affiliated venture capital units can improve their deal flows by recognising that they need to get accepted as an on-par investor in the venture capital environment.
Originality/value
The current study is the first of its kind investigating multiple investment logics by focussing on the link between different isomorphic habits and the specific context of bank-affiliated venture capitalists.
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Erika Sauer and Arja Ropo
This article uses a social constructionist approach based on ethnography and narrative analysis to understand emotions in leadership. The empirical context of the study is…
Abstract
This article uses a social constructionist approach based on ethnography and narrative analysis to understand emotions in leadership. The empirical context of the study is leadership of a theater ensemble's rehearsal process. The study shows that a creative process, such as in a theatrical setting, involves emotional paradoxes. Specifically, the study points out how shame can be used as a leadership tool to increase organizational performance and professional development, rather than for purposes of manipulation as may be typically assumed.
Over the past 5–8 years most industrialised countries in Western Europe have experienced a rapid expansion of labour market regulations with a long list of new proposals awaiting…
Abstract
Over the past 5–8 years most industrialised countries in Western Europe have experienced a rapid expansion of labour market regulations with a long list of new proposals awaiting legislation. In the field of education and training the rationale behind many of these anticipatory, preventive, corrective or otherwise named measures and planning instruments has been nurtured by two substantially different strands of thought: the economic notions of interrelationships between education, technology and economic growth on the one hand, and the use of educational reform for social policy purposes on the other. The impact of the former group has made itself felt in the enthusiasm and almost religious belief that more education is to be preferred to less, and that increases in the levels of schooling and training would be the panacea to economic growth and at the same time ease structural imbalances of labour markets. Industrial sociologists, political—and education—scientists, who on the other hand, were primarily concerned with the realisation of objectives such as equality of educational opportunities, industrial democracy and worker co‐determination or the humanisation of working conditions came basically to the same conclusion that more education for larger segments of the working population would be instrumental in achieving these objectives. Increased education, they argued, would give workers better starting chances, a larger mobility and flexibility potential, greater chances for promotion and more protection from the perils of structural change. Thus, while in the beginning a consensus existed on the desired directions of change in the field of education, as a subfield of active labour market policy, views very quickly diverged on the organisation and details of such changes; for example, what the proportions and roles of self‐regulating (market) forces as opposed to labour market interventions ought to be, whether monetary or non‐monetary control instruments would be more appropriate, how large and extensive the overhaul of the complete education system should be and what coincident or complementary measures were needed to make such proposals work in practice.
Elisa Garrido-Castro, Eva María Murgado-Armenteros and Francisco José Torres-Ruiz
Involvement has been one of the most studied variables in the field of marketing due to its determinant role in consumer behaviour, but always as a contextual or mediating…
Abstract
Purpose
Involvement has been one of the most studied variables in the field of marketing due to its determinant role in consumer behaviour, but always as a contextual or mediating variable. Taking its relationship with knowledge as the starting point, in this work, the purpose of this paper is to examine how to use the choice of information content in communication campaigns to drive up the level of involvement. A new method based on Qualitative Comparative Analysis (QCA) models is applied to the case of olive oil.
Design/methodology/approach
Quantitative research has been used for the proposed objectives of this work. Specifically, a computer-assisted telephone interviewing (CATI) has been conducted in several Spanish provinces using a structured questionnaire. Data obtained from 829 consumers are used.
Findings
The results support that consumer involvement with the product is related to objective knowledge about the product and its demand. Moreover, involvement can be modified through objective knowledge or information. Specifically, consumer involvement can be increased by the choice and communication of an optimal combination of five specific pieces of information (SPIs)
Originality/value
In this paper, involvement is considered as a result variable, i.e. a variable that can be modified or increased. This greater involvement can be achieved by improving the level of objective knowledge about a product. In addition, a new model is used and its viability is demonstrated and its ease of application to agri-food context.
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Sara Catalán, Eva Martínez and Elaine Wallace
This paper aims to explain the effect of flow, game repetition and brand familiarity on players’ brand attitude and purchase intention in the context of mobile advergaming.
Abstract
Purpose
This paper aims to explain the effect of flow, game repetition and brand familiarity on players’ brand attitude and purchase intention in the context of mobile advergaming.
Design/methodology/approach
Data from 227 participants who played a mobile advergame were analysed. Structural equation modelling with partial least squares was used to test the research model.
Findings
The results reveal that the independent variables (i.e. game repetition and brand familiarity) significantly influence the dependent variables explored in this study (i.e. brand attitude and purchase intentions of players). Results also show that brand familiarity influences players’ flow experience, which in turn significantly affects players’ purchase intentions.
Research limitations/implications
The findings of this study are important for advertising practitioners and advergames’ developers as understanding the determinants of mobile advergaming effectiveness is crucial for designing successful advergames that persuade players the most.
Originality/value
This study contributes to the literature in two ways. First, it provides new insights into the effectiveness of mobile advergames, which is an under-researched area. Second, it offers empirical evidence of the effects of game repetition, flow and brand familiarity on mobile advergaming effectiveness.