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The Journal of Private Equity

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Article

Family Business and Private Equity: Conflict or Collaboration? The Case of Messer Griesheim

Ann-Kristin Achleitner, Kerry Herman, Josh Lerner and Eva Lutz
The Journal of Private Equity Summer 2010, 13 (3) 7-20; DOI: https://doi.org/10.3905/jpe.2010.13.3.007
Ann-Kristin Achleitner
is a professor at the Center for Entrepreneurial and Financial Studies, TUM Business School, Technische Universität München in Munich, Germany. ann-kristin.achleitner@wi.tum.de
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Kerry Herman
is an assistant director at the Global Research Group, Harvard Business School in Boston, MA. kherman@hbs.edu
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Josh Lerner
is the Jacob H. Schiff Professor of Investment Banking in the Finance Unit and Entrepreneurial Management Unit at Harvard Business School in Boston, MA. jlerner@hbs.edu
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Eva Lutz
is an assistant professor at the Center for Entrepreneurial and Financial Studies, TUM Business School, Technische Universität München in Munich, Germany. eva.lutz@wi.tum.de
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Abstract

Privately held family businesses are usually characterized by concentrated ownership and the involvement of the family in both the management and control of the company. Theories of family control offer arguments both for governance benefits and costs due to the family involvement. It is therefore not yet fully understood whether buyouts of family firms offer the potential for private equity firms to create value through governance engineering. In addition, conflicts may arise in family-firm buyouts due to the shorter investment horizon of private equity firms compared to families that are interested in keeping long-term control over the company. The aim of this article is to investigate these research questions based on an in-depth analysis of the buyout of the German industrial gas company Messer Griesheim by Allianz Capital Partners and Goldman Sachs in 2001. Under private equity ownership, the company was restructured at a critical inflection point and governance benefits were alleviated through closer monitoring of the management, valuable external board members, and stronger management incentives. The deal navigated the delicate nature of specific aspects of a private equity-backed family firm and finally led to the family regaining control over a portion of its original businesses after the exit of the private equity firms.

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The Journal of Private Equity: 13 (3)
The Journal of Private Equity
Vol. 13, Issue 3
Summer 2010
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Family Business and Private Equity: Conflict or Collaboration? The Case of Messer Griesheim
Ann-Kristin Achleitner, Kerry Herman, Josh Lerner, Eva Lutz
The Journal of Private Equity May 2010, 13 (3) 7-20; DOI: 10.3905/jpe.2010.13.3.007

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Family Business and Private Equity: Conflict or Collaboration? The Case of Messer Griesheim
Ann-Kristin Achleitner, Kerry Herman, Josh Lerner, Eva Lutz
The Journal of Private Equity May 2010, 13 (3) 7-20; DOI: 10.3905/jpe.2010.13.3.007
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  • Article
    • Abstract
    • 1898: FOUNDING OF A FAMILY FIRM
    • BEING PART OF THE HOECHST PORTFOLIO
    • STRUGGLES FOR THE THIRD GENERATION
    • NEW START: THE DEAL WITH ACP AND GOLDMAN SACHS
    • EMPOWERMENT OF THE FAMILY: EXIT OF ACP AND GOLDMAN SACHS
    • 2008: RETURNING TO GERMANY
    • CONCLUSION
    • ENDNOTE
    • REFERENCES
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