Acquisitions, disclosed goals and firm characteristics: A content analysis of family and nonfamily firms

Maija Worek

Alfredo DeMassis

Mike Wright

Viktoria Veider

ABSTRACT

Despite the considerable body of research on acquisitions and their goals, we lack insights on how family firms differ from nonfamily firms in their acquisition goals, particularly in view of the distinctive characteristics that distinguish family businesses. Thus, to enhance current understanding, we examine firms’ disclosed goals in their deal announcements and find that firm ownership type is an important determinant of acquisition goals. Drawing on the content analysis of 558 deals from 393 firms, we identify seven goal categories. Our findings contextualize several differences in the goals of family and nonfamily firms, contributing to the family firm and acquisition literatures, offering implications for practice and potential avenues for future research.

Keywords: Acquisitions, Goals, Content analysis, Family firm, Family business, M&A

1. Introduction

Evidence suggests that at least half and possibly as much as 80 or 90 per cent of all acquisitions fail (Angwin, 2007; Christensen et al., 2011). Failure of acquisitions by family firms raise major challenges regarding potential wealth and control dilution risks (Basu, Dimitrova, & Paeglis, 2009; Gómez-Mejía, Patel, & Zellweger, 2015). However, despite recent attention to acquisitions in family businesses (Bjursell, 2011; Defrancq, Huyghebaert, & Luypaert, 2016; Requejo, Reyes-Reina, Sanchez-Bueno, & Suárez-González, 2018; Wang, Song, & Liu, 2016), much remains unknown about them (Astrachan, 2010). Prior studies suggest that firms with different ownership structures might have different preferences for engaging in acquisitions (Angwin, 2007; Haleblian, Devers, McNamara, Carpenter, & Davison, 2009). As family firms’ decisions are often driven by particular risk preferences (Gómez-Mejía, Haynes, Núñez-Nickel, Jacobson, & Moyano-Fuentes, 2007), social priorities, family-related noneconomic utilities (Kotlar & De Massis, 2013; Miller, Le Breton‐Miller, & Lester, 2010; Gómez-Mejía et al., 2015), and specific characteristics (Duran, Kammerlander, Van Essen, & Zellweger, 2015), the goals of family firms when conducting acquisitions need to be further understood. Ignoring the family firm context may lead to serious problems in acquisitions (Gisser & Gonzalez, 1993). This is an important issue since lack of clarity as to the goal of the acquisition is attributed as a major contributory factor in failure (Christensen et al., 2011).

General research on acquisition goals has tended to assume that the goals of widely held firms may not be directly applicable to family firms (Angwin, 2007; Haleblian et al., 2009). In this research stream that mainly focuses on large public corporations with diffused ownership, decision-makers are deemed rational agents who mostly base their acquisition activities on economic analyses (Jemison & Sitkin, 1986), ignoring the impact of noneconomic utilities on decision-making (Gómez-Mejía et al., 2015). Further, most research on acquisition goals relates to only managers, neglecting the goals of other influential parties, such as owners, in shaping acquisition activities (Fiss & Zajac, 2004; Kang & Sorensen, 1999; Miller et al., 2010). Owners in these cases are assumed to be profit maximizers, and managers may or may not act in the shareholders’ best interests in conducting acquisitions.

Building on Duran et al. (2015), we argue that the specific characteristics that distinguish family firms from nonfamily firms, namely, high level of control, wealth concentration, and importance of noneconomic utilities, influence their goals in strategic decisions, such as acquisitions. High family control over the family firm implies distinct structures, influencing authority and processes, and monitoring managers (Carney, 2005; Gedjalovic & Carney, 2010). High control is imposed by the concentration of wealth, which in turn makes family firms more sensitive to uncertain investments and strategic decisions compared to nonfamily firms (La Porta, López De Silanes, & Shleifer, 1999). Finally, noneconomic utilities relate to characteristics such as prioritizing the continuity of the family influence and maintaining long-term relationships with both internal and external stakeholders, which all influence the family firm’s strategic preferences (Duran et al., 2015). We argue that these distinctive characteristics of family firms may lead to different acquisition goals compared to nonfamily firms, since the family’s priorities will not only shape the number and type of acquisitions (Miller et al., 2010), but also the goals that drive them. As Angwin (2007) and Haleblian et al. (2009) suggest, acquisition goals are expected to differ among firms with different ownership structures, yet this is largely ignored in acquisition literature. Hence, we address the following research questions:

RQ1. Which goals do family firms disclose in their acquisition deal announcements?

RQ2. Do family firms’ disclosed goals in such contexts differ from those of nonfamily firms?

To address these questions, we draw on a content analysis using an inductive approach to examine the acquisition deal announcements reported in the press releases of 393 firms comprising 558 acquisitions from manufacturing and nonmanufacturing industries in 22 European countries over the period 2000-2013. This novel dataset enables examining how family and nonfamily firms communicate their disclosed goals, defined as the desired economic or noneconomic rationale of acquisition activities as communicated to stakeholders via organizational announcements (McKenny, Short, Zachary, & Payne, 2011). We identify seven goal categories: finance, innovation, stakeholders, resources, market competitiveness, strategy, and expansion. Our content analysis informs and contextualizes several differences in the majority of goals that family and nonfamily firms disclose.

We offer a number of important contributions to both theory and practice. First, we enrich the literature by showing that the specific characteristics of family firms compared to non-family firms determine their goals with respect to acquisitions. In so doing, our rich qualitative data enable us to extend prior work on the distinctiveness of family firm goals compared to their nonfamily counterparts by providing a fine-grained view of their goals when engaging in acquisition activities. Second, we extend the literature and the main theories on acquisition goals by showing that such goals differ between family and nonfamily firms, especially in relation to noneconomic goals, such as stakeholder goals, a perspective largely neglected in previous literature. Our findings further highlight the importance of distinguishing different types of synergies and the newness of markets and/or products when examining acquisition goals instead of treating them as identical and having the same value (e.g., Berkovich & Narayanan, 1993; Seth, Song, & Pettit, 2000, 2002), implying differences among firms with different ownership types that may influence acquisition outcomes. We also enrich the acquisition literature with our methodological setting. Cartwright, Teerikangas, Rouzies, and Wilson-Evered (2012) call for more methodological pluralism in acquisition literature, especially using an inductive approach to develop rather than describe theory. Third, to the best of our knowledge, this is the first study that examines the goals and intentions of family firm acquisitions, thus extending prior literature exploring the likelihood of family businesses engaging in the acquisition process and related performance (Worek, 2017).

2. Theoretical background

Acquisitions are an important means of corporate development (Cartwright & Schoenberg, 2006), allowing firms to adapt to technological changes or acquire resources that are not available internally (Capron, 1999; Swaminathan, Murshed, & Hulland, 2008). Academic research on acquisitions remains fragmented, and current knowledge on acquisition goals is particularly limited (Haleblian et al., 2009). Studies often examine mergers and acquisitions (M&A) jointly, but for family businesses, these may have quite different consequences in terms of control dilution[footnoteRef:2]. For this reason, it is reasonable to expect that acquisitions are more common than mergers when the acquirer is a family firm, and hence our focus on acquisitions in this study. [2: We thank an anonymous reviewer for this suggestion.]

2.1. Acquisition goals

Most researchers agree that acquisitions are motivated by complex and multiple objectives (Arnold & Parker, 2009; Hodgkinson & Partington, 2008; Nguyen, Yung, & Sun, 2012; Walter & Barney, 1990). Still, acquisition literature pays only modest attention to the goals of firms when making acquisitions, and three major perspectives are used to explain acquisition goals: 1) efficiency theory, 2) market power, and 3) agency and hubris theories.

Efficiency theory claims that acquisitions occur due to synergy goals (Trautwein, 1990), whereby firms engage in acquisitions to achieve such synergies (Porter, 1985, Seth et al., 2000; Trautwein, 1990), and value creation depends on the strategic and operational fit of the acquisition counterparties, with a greater combined value than that of the individual firms (King, Dalton, Daily & Covin, 2004, Singh & Montgomery, 1987). Second, according to the market power perspective, acquisition goals are motivated by external rewards, such as improving the market position or entry into a new market (Geiger & Schiereck, 2014; Ghosh, 2004; Levinson, 1970). Third, agency and hubris theories assume that goals derive either from managers’ opportunistic behaviors, such as wealth transfers between the shareholders, or managerial hubris (Marks & Mirvis, 2010; Nguyen et al., 2012). Managers may not put their own money into play, which may act as an incentive to take greater risks in acquisitions (Mueller, 1989). Such goals result in overpaying for target firms due to excessively optimistic synergy estimations, ultimately leading to negative shareholder value (Hodgkinson & Partington, 2008). This theory sees managers as agents seeking opportunistic possibilities where potential conflicts arise at the owner-manager level. Prior studies mostly examine acquisition goals using quantitative methods, seeking indirect explanations from market reactions (Berkovitch & Narayanan, 1993; Seth et al. 2000; 2002), despite that the market is found to be sensitive to information on deal announcements (Cicon, Clarke, Ferris, & Jayaraman, 2014; Henry, 2008). However, the assumptions of one-sided goals have been criticized, suggesting that a broader set of goals is needed to reflect the variety and influence of external dynamics, organizational strategies, and managerial objectives in acquisitions (Angwin, 2007; Walter & Barney, 1990), thus calling for alternative methods (Haleblian et al., 2009), especially using an inductive approach (Cartwright et al., 2012).

In addition, previous acquisition goal perspectives assume rational managerial behavior based on improving firm financial and economic performance (Angwin, 2007). Acquisition research generally treats decision-makers as agents who base their acquisition activities on deliberate analyses (Jemison & Sitkin, 1986), neglecting the cognitive and behavioral characteristics (Haleblian et al., 2009). However, acquisition activities are oftentimes driven by noneconomic utilities that run against the pure rational assumptions of efficiency and market power.

Different ownership structures may not only alter acquisition behavior (Haleblian et al., 2009), but entail other reasons for engaging in acquisitions than increasing shareholder value (Angwin, 2007), hence the importance of considering the motivations of owners. More precisely, specific ownership structures have relevant consequences for strategic decision-making and action, as different owner constituencies influence acquisition behavior, with distinctive goals directly related to firm owners (Miller et al., 2010). Governance and ownership influence how managers develop internal routines (Lazonick & O'Sullivan, 2002), how firms contract with external entities (Williamson, 1985), and how they ultimately create value (Carney, 2005). Most importantly, different ownership structures may also indicate differing interests (Haleblian et al., 2009), and thus different acquisition goals. It is therefore perplexing that acquisition research does not explicitly take into account the role of different ownership types in acquisition goals.

2.2. Family firm acquisition goals

The nature of goals pursued, the ownership structure, and the resources available generate differences in behaviors and outcomes between family and nonfamily firms (Chrisman, Sharma, Steier, & Chua, 2013). While little is known about family firms’ acquisition activities (Astrachan, 2010), prior literature suggests that their acquisition behavior differs from other ownership archetypes, whereby the specific ownership constituencies of family firms alter their strategic orientation, competition strategies (Gudmundson, Hartman, & Tower, 1999), and financial logic (Gallo, Tàpies, & Cappuyns, 2004).

Due to these differences, current acquisition theories cannot be unconditionally applied to family firms. The limited research in this area shows some differences between family and nonfamily firms in several areas, including lower acquisition propensity (Bauguess & Stegemoller, 2008; Miller et al., 2010), and contradictory evidence of both higher (André, Ben-Amar, & Saadi, 2014; Craninckx & Huyghebaert, 2015; Feito-Ruiz & Menéndez-Requejo, 2010) and lower performance (Basu et al., 2009; Bauguess & Stegemoller, 2008; Shim & Okamuro, 2011) compared to nonfamily firms. Beyond propensity and performance, other studies examine the acquisition process (Bjursell, 2011; Mickelson & Worley, 2003; Steen & Welch, 2006), but not the acquisition goals, despite that family firms are acknowledged as having other preferences when engaging in acquisitions (Feito-Ruiz & Menéndez-Requejo, 2010; Angwin, 2007). Accordingly, the present study examines the disclosed acquisition goals of family firms.

The characteristics of family firms generally manifest in three aspects (Duran et al., 2015): high level of control, wealth concentration, and the importance of noneconomic utilities. Owning families typically control the majority of the firm’s voting rights, which authorizes them to control and monitor their managers (Carney, 2005; Gedajlovic & Carney, 2010). As a consequence, one might assume that acquisition goals in family firms are determined to a greater extent by the desire to keep control within the family, maintain autonomy and limited accountability. Second, family wealth is often concentrated in one firm, leading to longer-term and less flexible investment preferences compared to other organization forms (Gómez-Mejía et al., 2007; Arregle, Hitt, Sirmon, & Very, 2007; Palmer & Barber, 2001). Wealth concentration is also linked to a careful approach towards risks and uncertainty (Duran et al. 2015), which together with their financial profile may shape the acquisition intentions (Miller et al., 2010), and hence the acquisition goals, of family firms.

Finally, high family control over the firm and the intertwined history of the family and the firm lead to noneconomic endowments (Chrisman, Chua, De Massis, Frattini, & Wright, 2015), linked to the tendency of owner-managers to attach high importance to family-centered noneconomic goals when making decisions (Chrisman, Chua, Pearson, & Barnett, 2012; Kotlar & De Massis, 2013). The family’s primary goal to retain business control across generations (Fiss & Zajac, 2004; Gómez-Mejía et al., 2007; Kotlar, Signori, De Massis, & Vismara, 2018), and preserve their internal and external long-term relationships (Cruz, Gómez-Mejía, & Becerra, 2010; Zellweger, Nason, Nordqvist, & Brush, 2013), are thus expected to shape acquisition activities. For example, synergy as a generic acquisition goal (Hodgkinson & Partington, 2008; Angwin, 2007) is also present in family firm acquisitions, but they may prefer synergies in physical resources instead of managerial skills to maintain a high level of control and protect the noneconomic utilities. Furthermore, to maintain a high level of control, they may prefer current rather than new, unknown, and risky technologies and markets when seeking market power in acquisitions. Finally, agency and hubris goals may be either mitigated in family firms due to reduced agency conflicts (Anderson, Mansi, & Reeb, 2003) or the family may pursue its own, even opportunistic, goals to the detriment of other shareholders (Morck & Yeung, 2003). In nonfamily firms, these characteristics are different. Ownership might be diffuse, as in listed firms, or concentrated, such as in companies with private equity or venture capital backing. These firms have outsiders to the firm playing a key monitoring and control role. Second, their wealth portfolios are typically more diverse, especially in listed firms either as individuals or as institutional shareholders. Venture capital or private equity investors will have a narrower portfolio of investee firms but contrary to family firms, not just concentrated in one firm. Regarding noneconomic utilities, listed and private equity or venture capital owners will focus mainly on shareholder wealth maximization.

Therefore, there are strong conceptual reasons to expect that the disclosed goals of family firms will differ from those of nonfamily firms. Figure 1 presents a graphic overview of our conjecture that family firm characteristics will in some way affect family firms’ acquisition goals and, respectively, for nonfamily firms.

Family firm nature

High level of control

Wealth concentration

Importance of noneconomic utilities

Acquisition goals

Family firm characteristics

Nonfamily firm nature

Nonfamily firm control

Low wealth concentration

Importance of economic utilities

Acquisition goals

Nonfamily firm characteristics

Figure 1. Expected influence of the family and nonfamily nature of a firm on acquisition goals.

Our qualitative content analysis aims to bridge the gap in literature by investigating the goals that family firms disclose in their acquisition deal announcements compared to their nonfamily counterparts. We thus complement acquisition literature by highlighting the importance of firm ownership type in acquisition behavior.

3. Methods

We focus on the firms’ disclosed goals (Crane, 2000; Kotlar, De Massis, Wright, & Frattini, 2018; McKenny et al., 2011; Roth & Ricks, 1994), defined as their desired economic and noneconomic outcomes communicated to stakeholders (Vandenberghe, 2011). According to Trautwein (1990), acquisition goals can be examined either through direct investigation or indirect inference from their outcomes. Through a content analysis, we examine the firms’ deal announcements to identify the goals that companies disclose, a method that offers a number of potential benefits (Weber, 1990).

First, content analysis is widely used to highlight strategic decision-making processes (Short, Payne, Brigham, Lumpkin, & Broberg, 2009) and identify causal statements by testing the differences between two groups (Hooghiemstra, 2010), thus, particularly suited to assessing the goals disclosed in acquisitions. Second, it is less obtrusive in capturing cognitions (Phillips, 1994) and tends to avoid recall biases (Barr, Stimpert, & Huff, 1992), enabling ex post examination of past organizational announcements (Moss, Payne, & Moore, 2014). Finally, the use of texts, such as deal announcements, enables greater reliability and replicability (Finkelstein & Hambrick, 1990).

To select organizational announcements reflecting the disclosed goals of family firms in the context of acquisitions, we rely on the deal announcements reported in official press releases accompanying the acquisition process. Press releases may be criticized as influence tools, as they are often written by public relations firms, and companies may use them to impress stakeholders or whitewash problematic issues (Vandenberghe, 2011; Kimbrough & Wang, 2014). As they address shareholders, press releases comprising the statements of high-level managers contain both assertive and informative elements, and may aim to rhetorically influence various constituencies (Vandenberghe, 2011). Press releases convey aspects of an organization’s identity (Albert & Whetten, 1985) and are targeted at a broad audience outside the company (McKenny et al., 2011; Vandenberghe, 2011). Nevertheless, press releases provide a major information channel as a basis for action by those outside the firm. As a public record against which the outcome of managerial actions might be judged, they are an important documentary source for the analysis of acquisition goals.

3.1. Sampling criteria and context

We employ a novel dataset of international acquisitions involving European acquirers, examining their ownership structure and distinguishing between family and nonfamily owners. We obtained data concerning the deals from Zephyr, an international database on ownership changes compiled by Bureu van Dijk. We also obtained the deal announcements reported in official press releases from Zephyr, which are public announcements by the acquiring company’s CEOs or other directors. The search led to our original sample comprising 3563 deals. After removing deals with no information on the deal rationales, we arrived at 558 international deals between the years 2000-2013. We then excluded firms where ownership data was missing or insufficient. We obtained the ownership data from the Orbis database, and supplemented and integrated it with information disclosed in the annual reports, in the investor relations sections of their websites, and in the financial press releases. Following prior literature calling for a combination of the involvement approach and the essence approach to identify family firms (Chrisman et al., 2012), we define a family firm as such when the three following conditions are all met. First, family members hold a substantial portion of equity. Consistent with a number of prior studies (André et al., 2014; Gómez-Mejía, Makri, & Kintana, 2010; Muñoz-Bullón & Sanchez-Bueno, 2011; Wong, Chang, & Chen, 2010), we use a 10% family ownership threshold to ensure that the family holds a substantial proportion of a company’s equity. When examining family voting shares, we also included the shares of co-trustees of family trusts directly in family hands (Granata & Chirico, 2010; King, Dalton, Daily, & Covin, 2004). The second condition is that two or more members of the family are actively engaged in the company, holding a position in the top management team. Consistent with Campopiano and De Massis (2015), we identified familial relations from their family names. The third condition is that the firm self-identifies as a family firm. Self-identification is a proxy for the essence approach to define family firms, and is used to complement the involvement approach (Chrisman et al., 2012). We mainly assessed the information on self-identification as a family firm from the firms’ websites (Calabrò, Campopiano, Basco, & Pukall, 2017; Campopiano & De Massis, 2015). Firms that did not fulfil all these three conditions were considered nonfamily firms. To control the validity of our categorizations, we randomly contacted selected nonfamily firms from our sample to check whether they define themselves as family or nonfamily firms; all confirmed themselves as nonfamily firms. Our sample meets the following criteria: 1) all deals completed in the period 2000-2013 for European acquirers, 2) international, global, and domestic deals, also of serial acquirers, 3) both acquirers and targets may be public or private, listed or unlisted companies, and 4) in all deals, at least a 51.5% stake was acquired. Detailed information of the acquiring companies is reported in Table 1.

Table 1

Distribution of acquiring firms in the sample by listing, size, industry, country of origin, and deal type.

 

Family firms

Non-family firms

Listed

31

133

Family equity <50%

18

 

Family equity >50%

13

 

Non-listed

73

156

Family ownership <50%

12

 

Family ownership >50%

61

 

Large

70

141

SME

28

122

Manufacturing

75

219

Other than manufacturing

23

67

Acquirer origin

 

AT

5

9

BE

1

1

BG

0

1

CY

1

1

DE

29

74

DK

3

12

EE

0

1

ES

8

15

FI

4

2

FR

8

11

GB

20

96

GR

1

3

HU

0

1

IE

0

4

IT

18

26

LT

0

1

LU

0

2

LV

1

0

NL

2

4

PL

2

8

RO

0

1

SE

1

16

Deal type

 

Domestic

60

225

Cross-border *

107

163

* Of which overseas

43

50

(Target country not available)

1

2

Deals total

168

390

Firms total

104

289

The final sample consists of 558 deals from 393 firms, of which 104 are family firms (168 deals) and 289 nonfamily firms (390 deals) according to the criteria reported above. The firms are categorized according to size – large vs small- and medium-sized (SME) – applying the definition of the European Commission (2005) headcount (fewer than 250 employees). For family firms, 31 (30%) are listed and 73 (70%) are non-listed. The acquiring firms represent 22 European countries, targeting companies in 49 different countries globally. The majority of the acquiring firms in our sample (67%) are based in Germany, the UK, and Italy. The majority of companies (294 firms, 75%) operate in the manufacturing sector (UK 2007 SIC 10-33). Firms in other industry sectors mainly operate in telecommunications, installation, wholesale, and construction. Table 1 also reports the number of domestic, cross-border, and specifically overseas deals. Overseas deals include acquisitions where the target company is from another continent. We also report the number of acquisitions in countries with high vs. low shareholder legal protection. The legal environment influences acquisition propensity and performance, as high shareholder protection mitigates family firms’ lower acquisition propensity (Feito-Ruiz & Menéndez-Requejo, 2010; Requejo et al., 2018). Following Requejo et al. (2018), shareholder protection is considered higher in common law countries and Scandinavian civil law countries, and lower in German and French civil law countries. The deals are very evenly distributed between these two classifications: in family firms, 40% of deals are in a high and 60% in a low protection environment, whereas 50.5% of nonfamily firms are in a high and 49.5% in a low protection environment.

Altogether, in 993 instances, goals were nominated in the announcements, of which 283 were disclosed in 168 deals of the acquiring family firms, and 710 goals were disclosed in 390 deals of the acquiring nonfamily firm. At least one goal is nominated in each announcement, and on average, the firms nominated 1.7 goals in family firms and 1.8 in nonfamily firms.

3.2. Data analysis

To analyze the disclosed goals of firm acquisitions, we used the content analysis approach adapted from Neuendorf’s (2002) seminal methodology. We delimited our coding at the clause level of analysis, as companies may discuss more than one goal within a sentence (McKenny et al., 2011). To identify the goals, the first and the last authors read through each document clause by clause and noted each goal identified (Weber, 1990), tracking the total number of times each goal was referenced in each announcement (Short et al., 2009). To ensure accurate interpretation, the preliminary results were examined by another person to assess the validity of each goal and whether it truly captured the meaning of the clause in question (Brigham, Lumpkin, Payne, & Zachary, 2014). To assess the degree of inter-rater reliability, we employed three expert judges who scanned the wordlist and provided feedback on the validity of the codes. After receiving feedback from the judges, the wordlists retained those words that were agreed on by at least two of the three judges (Moss et al., 2014). Since we followed a multiple coder procedure (Barr et al., 1992), we assessed reliability through the evaluation of a so-called inter-rater agreement (Short et al., 2009), which was 89% on completion of our study, indicating high reliability among the raters on the goal dimensions (Brigham et al., 2014). In the event of a disagreement, the authors engaged in a discussion until agreement was reached (e.g., James, Demaree, & Wolf, 1993).

As regards the creation of codes and categories, we inductively generated first-order codes from the deal announcements and compared these against the insights from existing theoretical perspectives and empirical studies (Campopiano & De Massis, 2015; Tsui‐Auch, 2004), also in relation to acquisition goals (Angwin, 2007; Bower, 2001; Walter & Barney, 1990). Each clause was placed into one of the categories. However, any passage where the coders had doubts was discussed between the authors, until agreement was reached on the appropriate code. Furthermore, any construction of codes and categories led to reviewing all other deal announcements, whereas the final list of codes served as an organizing device to recode the documentary data (Pratt, Rockmann, & Kaufmann, 2006). The fine-tuning of codes and categories in the analysis continued until saturation and iteration between the data and the theoretical perspectives up to reaching theoretical saturation (Campopiano & De Massis, 2015; Eisenhardt, 1989); for example, the code “cultural fit” was moved from the stakeholder to the strategy category, as in the discussion this was seen more as a strategic goal than a shareholder issue. Furthermore, the codes in the category originally called “product/market extension” (as in Bower, 2001) were divided into two new categories “innovation” and “expansion” (similar to Angwin, 2007) to enable distinguishing innovation from generic expansion. The firm’s ownership status was not known during the coding process. Additionally, we conducted phone interviews with three family firms from our sample that were willing to cooperate, all confirming our interpretation of the goals of these transactions.

We subjected the findings of the content analysis to statistical inference. To answer the research questions, we used the content categories as the subject of the statistical analysis. We performed a proportion z-test (Fuchs, Prandelli, Schreier, & Dahl, 2013) among the groups of family and nonfamily firms, and also controlled for industry, size, and listing, to examine whether these variables affect our findings. This test allowed comparing relative occurrences of codes between family and nonfamily firms, where the basic population is binomially distributed (Auer & Rottmann, 2010), and the statistical differences are calculated by comparing the proportions.

4. Results

Our research questions aimed to understand which goals family firms disclose in their acquisition deal announcements and whether they differ from those disclosed by nonfamily firms. A preliminary within-case analysis helped us consider each deal announcement separately and document the inherent acquisition goals each firm communicated. This allowed collecting comprehensive and reliable information indicating the acquisition goals of each firm, since most deal announcements from the 393 firms clearly showed what led them to engage in acquisitions (Campopiano & De Massis, 2015). Based on this within-case analysis, we conducted a comparative cross-case analysis to “reach a general explanation” (Campopiano, De Massis, & Cassia, 2012, p. 400) of the acquisition goals. The underlying aim was to discover recurrent patterns among firms that engaged in acquisition initiatives, and specifically focusing on the differences between family and nonfamily firms.

4.1. Goal categories

The seven distinctive goal categories that emerged from our analysis are finance, innovation, stakeholders, resources, market competitiveness, strategy, and expansion, as reported in Table 2. Family firms disclosed 40 and nonfamily firms 45 different goals within these categories (illustrative examples are provided in Table 3 and in the Appendix).

Table 2

Distribution of goals disclosed in acquisition announcements

 

 

TOTAL

 

Family FirmsNonfamily Firms

Goal category

Disclosed goals

Count

% Total

Count

% Total

Count

% Total

FINANCE

 

 

 

 

 

 

 

 

Financial resources

11

1.11%

3

1.06%

8

1.13%

 

Profitability

13

1.31%

4

1.41%

9

1.27%

 

Cost reduction

13

1.31%

2

0.71%

11

1.55%

 

Revenue

30

3.02%

3

1.06%

27

3.80%

 

Short term equity investment

2

0.20%

0

0.00%

2

0.28%

INNOVATION

Technology expertise

69

6.95%

14

4.95%

55

7.75%

 

Innovation initiatives

13

1.31%

4

1.41%

9

1.27%

 

R&D

9

0.91%

1

0.35%

8

1.13%

STAKEHOLDERS

Service

26

2.62%

8

2.83%

18

2.54%

 

Corporate social responsibility

1

0.10%

1

0.35%

0

0.00%

 

Green and sustainability

3

0.30%

1

0.35%

2

0.28%

 

Workforce

20

2.01%

15

5.30%

5

0.70%

 

Long-term relationships

13

1.31%

4

1.41%

9

1.27%

RESOURCES

Manufacturing capability/capacity

30

3.02%

11

3.89%

19

2.68%

 

Management expertise

23

2.32%

4

1.41%

16

2.25%

 

Distribution network

8

0.81%

1

0.35%

7

0.99%

 

Marketing and/or sales network

10

1.01%

1

0.35%

9

1.27%

 

Critical mass

5

0.50%

0

0.00%

5

0.70%

 

Raw materials

3

0.30%

1

0.35%

2

0.28%

 

Economies of scale and scope

9

0.91%

0

0.00%

9

1.27%

 

Complementary competencies

14

1.41%

6

2.12%

11

1.55%

MARKET COMPETITIVENESS

Exploit synergies

31

3.12%

10

3.53%

21

2.96%

 

Strengthen core business

32

3.22%

5

1.77%

27

3.80%

 

Productivity

3

0.30%

1

0.35%

2

0.28%

 

Product quality

3

0.30%

1

0.35%

2

0.28%

 

Leadership position

58

5.84%

18

6.36%

40

5.63%

 

Strengthen country position

46

4.63%

19

6.71%

27

3.80%

 

Strengthen market position

38

3.83%

13

4.59%

25

3.52%

 

Customers

33

3.32%

16

5.65%

17

2.39%

 

Speed

9

0.91%

1

0.35%

8

1.13%

 

Product pricing

1

0.10%

0

0.00%

1

0.14%

STRATEGY

Restructuring

0

0.00%

0

0.00%

0

0.00%

 

Cultural fit

5

0.50%

4

1.41%

1

0.14%

 

Strategic reorganization /repositioning

10

1.01%

2

0.71%

8

1.13%

 

Local business opportunities

4

0.40%

2

0.71%

2

0.28%

 

Niche player/specialization

11

1.11%

1

0.35%

10

1.41%

 

Strategic fit

8

0.81%

1

0.35%

7

0.99%

 

Simplifying ownership structure

1

0.10%

1

0.35%

0

0.00%

 

Prevent hostile takeover

1

0.10%

0

0.00%

1

0.14%

 

Market access

48

4.83%

11

3.89%

37

5.21%

EXPANSION

Growth

78

7.85%

28

9.89%

50

7.04%

 

Product portfolio expansion

107

10.78%

29

10.25%

78

10.99%

 

Geographic expansion

85

8.56%

20

7.07%

65

9.15%

 

Turnkey supplier

11

1.11%

1

0.35%

10

1.41%

 

Diversification

17

1.71%

9

3.18%

8

1.13%

 

Brand addition

28

2.82%

6

2.12%

22

3.10%

In the following, we illustrate each goal category that emerged from our content analysis. We then discuss each in light of the statistical tests of whether there are significant differences between family and nonfamily firms, and test contingencies for differences in size, industry, listing, legal environment, and deal type (domestic/cross-border/overseas). Drawing on the distinctive characteristics of family firms, namely, high level of control, wealth concentration, and noneconomic utilities (Duran et al., 2015), we propose why acquisition goals across these categories may differ with regard to nonfamily firms.

Table 3 summarizes, for each goal category, the effect of our analysis of family versus nonfamily firms, the main theoretical arguments behind our emerging propositions, the link with literature, and some illustrative examples from the deal announcements of family and nonfamily firms. Table 4 provides a synoptic view of the occurrences of the goal categories and the results of the statistical tests, enabling a straightforward comparison between the goal categories of family and nonfamily firms.

1

Table 3

Evidence of the content analysis, theoretical arguments, and links with literature.

Goal category

Effect

Confirms/questions prior literature

Family firm statements

Nonfamily firm statements

Finance

Lower in Family firms

Family firm literature:Wealth concentration: sensitivity to uncertain investments, (Anderson, 2003; La Porta et al., 1999), through patient capital (Sirmon, Hitt, Ireland, & Gilbert., 2011), less need to pursue financial goals through acquisitions, long-term oriented in their financial strategy (Dreux, 1990), which might contrast with short-term financial goals, financial gains from patient capital (Sirmon et al., 2011)Noneconomic utilities: priority for family firms over financial returns (Gómez-Mejía et al., 2007), especially in risky investments.

Concentration on long-term financial goals: Wealth concentration implies a long-term orientation in investments (Arregle et al., 2007; Palmer & Barber, 2001)Noneconomic goals: Prioritizing long-term survival over short-term gains (Gómez-Mejía et al., 2007)

Acquisition literature: Points to the importance of examining the time horizon (long-term vs. short-term) when examining financial synergies.

Thanks to the takeover, our line of machines for the mining sector will be supplemented and expanded by machinery needed for brown coal extraction. [---] The synergy within the Famur Group will lead to even higher profitability and expansion of our outlets in the future

(Famur SA)

Capital Partners acquisition of Gekoplast is a short-term equity investment

(Capital Partners SA)

We are growing at quite a rate and have been looking for acquisitions that could help increase our turnover. We identified Cobalt as highly complementary to our own operations

(Harland)

Innovation

Lower in Family firms

Family firm literature:Wealth concentration: less financial resources to invest in uncertain activities (Anderson et al., 2003), such as innovation. High level of control and noneconomic utilities: External resources and expertise connected to innovation may be perceived as a threat to both (Morck & Yeung, 2003; Duran et al., 2015; Gómez-Mejía et al., 2007).

Acquisition literature: As in the market competitiveness category, points to the importance of distinguishing between new and/or existing markets and products when examining market power goals.

The acquisition [---] furthers our vision to better serve patients and health care professionals with innovative products, a strong clinical research capability and new research into recombinant therapies. We look forward to combining the strengths of both companies to improve the quality of the lives of patients around the world, while positioning the enlarged group for long term profitable growth (Grifols SA)

We believe this technology to be an interesting and competitive alternative to other systems available on the market in the growth sector of protein analytics and molecular diagnostics. [---] Of particular interest is the fact that both the technology and the sample preparation chemistry use synergies with Analytik Jena’s bio solutions business unit

(Analytik Jena)

Stakeholders

Higher in Family Firms

Family firm literature:Wealth concentration: to maintain it, family firms seek to increase stability and family reputation with their stakeholders. Noneconomic utilities: Proactive stakeholder engagement (Cennamo, Berrone, Cruz, & Gómez‐Mejía, 2012), developing good connections with external and internal stakeholders (Zellweger et al., 2013).

Concentration especially on workforce goals in their announcements:Noneconomic utilities: establishing trust among employees (Miller & Le Breton-Miller, 2005), reducing distress linked to acquisitions (Nemanich & Keller, 2007; Seo & Hill, 2005)

Acquisition literature:

Points to the importance of examining stakeholder goals (see also Angwin, 2007; Haleblian et al., 2009) and distinguish different types of stakeholders.

[Acquisition] helps us secure a number of jobs in this region (Morgan Grp Ltd)

This acquisition will see many benefits in efficiency for our customers

(Zonal Retail Data System)

We also offer a warm welcome to the new team members from Long Elevator who will be joining KONE through this acquisition

(KONE Corporation)

The whole staff will join Christeyns and help the Group to reach a consolidated turnover in the Italian market of about 20m (Christeyns Italia Srl)

Resources

No significant overall differences

Family firm literature:High level of control and noneconomic utilities: Acquiring external [managerial] expertise may threaten both (Duran et al., 2015; Gómez-Mejía et al., 2007). Concentration on physical rather than managerial resources to support stability and to maintain a high level of control.

Acquisition literature:Types of resources [physical/managerial] should be distinguished, as this might imply differences in synergies/efficiencies.

We will use the raw materials from the Strelitsa quarry to supply the booming Voronezh region. In the next stage, HeidelbergCement will construct a new, modern cement plant with an annual capacity of 1.2 million tons in the region (HeidelbergCement)

By taking over Europe’s leading manufacturer of refrigerant fittings we have secured a supply to our manufacturing sites worldwide, and expanded our product portfolio

(Bitzer SE)

Market competitiveness

Higher in family firms

Family firm literature:Concentration of wealth: current business areas seem less risky (Anderson et al., 2003). Noneconomic goals: prioritizing long-term profitability, which is increased by market competitiveness (Ghosh, 2004)

Acquisition literature: Points to the importance of distinguishing between new and/or existing markets and products when examining market power goals

The acquisition strengthens Ferroli's position on the Chinese market, where it has been operating for the past three years

(Ferroli Spa)

The acquisition of Bovill & Boyd provides us with the strength of having the leading distributor of gaskets, seals and rubber moldings in Scotland on board

(British Gaskets)

Strategy

No significant overall differences

Family firm literature:Cultural and strategic fit are seen as important success factors in M&As, particularly for family firms (Bjursell, 2011; Mickelson & Worley, 2003).

Acquisition literature:[generic goals in this category, no proposition]

It is also a family-owned company so our business philosophies and approach fit well together

(Chr. Renz GmbH)

The distinct culture and values will benefit both companies

(L’Oreal)

There is a very good level of strategic fit between the two companies. Both are successful manufacturers of different but complementary ruminant product ranges. In addition, Net-Tex is active in equine and pet markets

(Rumenco)

Expansion

No significant overall differences

Family firm literature:

Family ownership's positive influence on expansion (Zahra, 2003), but both negative (Górriz & Fumás, 2005; Caprio, Croci, & Del Giudice, 2011; Chirico & Nordqvist, 2010) and positive (Villalonga & Amit, 2006; Miller, Le Breton‐Miller, & Scholnick, 2008) evidence for family business growth exists.

Acquisition literature:[generic goals in this category, no proposition]

The acquisition is in line with the external growth strategy of the Perego family

(MPG Manifattura Plastica Srl)

The relocation of production from the USA to Mexico offers us a great opportunity for growth, and allows us a better alliances with our North American customers

(Cie Automotive)

Table 4

Synoptic representation of the goals disclosed in acquisition announcements of family and nonfamily firms, and results of the statistical comparison of these occurrences

Firm categories

Finance

 

Innovation

 

Stakeholders

 

Resources

 

Market Competitiveness

 

Strategy

 

Expansion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Family

4.24%

 

6.71%

 

10.25%

***

8.48%

 

29.68%

*

7.77%

 

32.86%

 

Absolute number

(12)

 

(19)

 

(29)

 

(24)

 

(84)

 

(22)

 

(93)

 

Listed

2.83%

 

2.83%

 

6.36%

***

3.53%

 

14.13%

 

1.77%

 

15.55%

 

Non-Listed

1.41%

 

3.89%

 

3.89%

 

3.53%

 

12.72%

*

5.65%

 

15.55%

 

Manufacturing

3.53%

 

5.30%

 

8.48%

***

7.07%

 

26.15%

***

5.65%

 

26.86%

 

Other Industries

1.41%

 

2.12%

 

2.47%

 

2.12%

 

7.42%

 

3.18%

 

8.83%

 

Large Firms

3.18%

 

6.01%

 

8.13%

***

6.71%

 

25.09%

***

5.65%

 

26.15%

***

SMEs

2.08%

 

0.71%

 

0.71%

 

1.77%

 

4.59%

*

1.41%

 

6.01%

 

FF Targets*

0.00%

 

0.00%

 

22.22%

 

11.11%

 

22.22%

*

0.00%

 

44.44%

 

NFF Targets*

6.33%

 

5.06%

 

12.66%

*

10.13%

 

27.85%

 

8.86%

 

29.11%

 

Domestic deals

2.47%

 

2.12%

 

1.77%

 

3.18%

 

8.48%

 

3.18%

 

11.66%

*

Cross-border deals

0.47%

 

4.59%

 

7.77%

***

5.65%

 

19.79%

***

2.47%

 

20.85%

 

Overseas deals

1.06%

 

1.06%

 

6.36%

***

2.83%

 

34.41%

 

1.41%

 

8.83%

 

High protection

1.41%

 

2.47%

 

6.36%

***

4.59%

 

14.84%

 

3.18%

 

12.72%

 

Low protection

2.83%

 

4.24%

 

3.89%

 

3.89%

 

14.84%

**

4.59%

 

20.14%

 

Nonfamily

8.03%

**

10.14%

**

4.79%

 

10.99%

 

23.94%

 

9.30%

 

32.82%

 

Absolute number

(57)

 

(72)

 

(34)

 

(78)

 

(170)

 

(66)

 

(233)

 

Listed

6.34%

**

6.34%

**

1.69%

 

6.76%

*

15.49%

 

6.62%

***

18.73%

 

Non-Listed

1.69%

 

3.80%

*

3.10%

 

4.08%

 

8.31%

 

2.68%

 

13.80%

***

Manufacturing

6.34%

*

7.89%

 

3.52%

 

8.03%

 

18.31%

 

6.90%

 

26.90%

 

Other Industries

1.69%

 

2.25%

 

1.27%

 

2.82%

 

5.49%

 

2.39%

 

5.63%

 

Large Firms

3.80%

 

6.34%

 

2.11%

 

5.92%

 

15.35%

 

5.35%

 

16.62%

 

SMEs

3.94%

***

3.10%

 

2.11%

 

4.51%

**

7.61%

 

3.24%

 

13.52%

 

FF Targets*

5.00%

 

0.00%

 

20.00%

 

15.00%

 

5.00%

 

0.00%

 

55.00%

 

NFF Targets*

13.64%

 

8.18%

 

6.36%

 

11.82%

 

22.73%

 

7.27%

 

30.00%

 

Domestic deals

5.49%

**

6.34%

***

2.54%

 

5.77%

*

13.66%

**

6.20%

 

16.06%

 

Cross-border deals

2.82%

 

3.94%

 

2.25%

 

5.07%

 

10.00%

 

2.82%

 

16.34%

 

Overseas deals

0.99%

 

1.27%

 

0.42%

 

1.41%

 

25.26%

 

6.32%

 

5.07%

*

High protection

5.63%

***

4.93%

*

2.54%

 

7.61%

*

13.38%

 

6.34%

 

15.63%

 

Low protection

2.39%

 

5.21%

 

2.25%

 

3.38%

 

10.14%

 

2.96%

 

17.18%

 

*p<0.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

** p <.05.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*** p<.01.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Each percentage is calculated as the ratio of the number of citations of each code and the total number of all codes (absolute number of citations in brackets). * Only 22% of the targets are identified as family or nonfamily.

4.2. Acquisition goals of family vs. nonfamily firms

Finance goals relate to financial resources, profitability, cost reduction, and revenue. Thus, firms disclosing these types of goals seek to increase their revenue and profitability, or acquire financial resources through acquisitions, as illustrated in Table 3.

Our results suggest that family firms overall emphasize fewer financial goals in their deal announcements compared to nonfamily firms. Due to their wealth concentration, family firms are more sensitive to uncertain investments (Anderson et al., 2003; Bianco, Bontempi, Golinelli, & Parigi, 2013; La Porta et al., 1999). However, by leveraging their patient financial capital (Sirmon et al., 2011) and their other physical and financial assets (Dyer & Whetten, 2006), they can depend less on external sources of financing and short-term financial needs (Dreux, 1990), implying their lesser need to undertake acquisitions with financial goals. Moreover, wealth concentration is shown to render family firms more long-term oriented in their strategy making (Arregle et al., 2007; Palmer & Barber, 2001). However, building long-term capabilities and relationships often stands in contrast to short-term financial gains. Finally, noneconomic goals, such as willingness to preserve and protect the family legacy (Zellweger, Kellermanns, Chrisman, & Chua, 2012) and family harmony (Cennamo et al., 2012; Chrisman, Chua, & Zahra, 2003), are an important priority in family firms over financial returns (Gómez-Mejía et al., 2007). Through their social capital, family firms may have good relationships with local financial institutions (Sirmon et al., 2011), implying they may not need acquisitions to pursue their financial goals. Moreover, when examining the descriptive differences between the individual codes in Table 2, we can see that when disclosing financial goals, family firms concentrate more on profitability than revenue and short-term goals in their announcements. This reflects their long-term strategic orientation (Arregle et al. 2007; Palmer & Barber, 2001) and noneconomic goals, which lead family firms to prioritize their long-term survival (Gómez-Mejía et al., 2007) over short-term financial goals (Bercovitz & Mitchell, 2007). Drawing on these arguments, we propose:

P1. Family firms disclose fewer financial goals than nonfamily firms in their acquisition deal announcements, since (a) high wealth concentration makes them more risk averse, implying that they might use other assets instead of acquisitions to pursue financial goals, (b) a more long-term orientation in their strategy, which might contrast with short-term financial goals, and (c) noneconomic goals are an important priority over financial returns, especially in risky investments such as acquisitions.

P2. When family firms disclose financial goals in their acquisition deal announcements, they concentrate more on long-term profitability than on short-term financial goals, such as cost reduction and increasing revenue, since (a) wealth concentration makes them more long-term oriented in their strategic decisions, such as acquisitions, aiming at profitability, and (b) the presence of noneconomic goals leads them to prioritize survival over short-term financial goals, as long-term profitability is central to business survival.

In examining the acquisition goals, Proposition 1 points to the importance of distinguishing between different types of synergies, such as financial or managerial synergies, as these have different implications for firms with different ownership types. Thus, future research should examine different ownership types and thereby distinguish between types of synergies instead of assuming all synergies are identical and of the same value, as in prior research (Arnold & Parker, 2009; Cicon et al., 2014; Berkovitch & Narayanan, 1993; Hodgkinson & Partington, 2008; Seth et al., 2000), leading to one-sided interpretations of acquisition goals. This extends the synergy/efficiency perspective in the acquisition literature (Mukherjee, Kiymaz, & Baker, 2004; Seth et al., 2002), suggesting that different types of synergies may explain acquisition priorities.

In examining financial synergies in acquisition goals, Proposition 2 points to the importance of distinguishing between different types of financial preferences. As financial preferences may vary among firms with different ownership types (Anderson, Duru, & Reeb, 2012; Gallo et al., 2004), future studies drawing on samples of firms with different ownership types could examine the heterogeneity of financial synergies treated as a monolithic block (e.g., Larsson & Finkelstein, 1999). This proposition extends the synergy/efficiency perspective (Mukherjee et al., 2004; Seth et al., 2002), suggesting the need to examine the time horizon associated with financial synergies, especially long- versus short-term financial gains. This has been largely neglected in the literature, despite the different implications for firms with different ownership structures.

Innovation goals concern the acquisition of technological expertise, the adoption of innovation initiatives or R&D. We find that family firms disclose fewer innovation goals in their deal announcements compared to nonfamily firms.

Seeking new ways of thinking, new products and technologies may result in increased, but also highly varied performance outcomes and risk (Wiseman & Bromiley, 1996). Innovation is seen as critical for growth (Morck & Yeung, 2003), especially through external acquisition (Kotlar, De Massis, Frattini, Bianchi, & Fang, 2013). However, for family firms, externally acquiring innovation might impede high levels of control due to the perceived uncertainty (Duran et al., 2015). For example, innovation might imply acquiring external expertise and granting managers responsible for innovation greater autonomy (Gómez-Mejía et al., 2007; Morck & Yeung, 2003), which is why family firms may prefer to retain a high level of control instead of engaging in innovation acquisitions. Particularly in family firms, full control over product development may be a question of self-identification (Donnelley, 1964), strongly associated with the family’s position in the community (Kotlar & De Massis, 2013). Acquiring such expertise may be seen as a threat to the family’s noneconomic utilities (Gómez-Mejía, Campbell, Martin, Hoskisson, Makri & Sirmon, 2014). As noneconomic utilities lead to efficient internal processes supporting innovation (Duran et al., 2015), family firms may choose to develop innovations internally or through tradition (De Massis, Frattini, Kotlar, Petruzzelli, & Wright, 2016; Rondi, De Massis & Kotlar, 2018) rather than through acquisition. Finally, concentration of wealth implies that family firms invest fewer financial resources in uncertain activities, such as innovation projects (Duran et al., 2015). Family business literature further suggests that family firms are less likely to invest in innovation activities (De Massis, Frattini & Lichtenthaler, 2013), and are characterized by a lower willingness to innovate (Chrisman et al., 2015), unless some kind of protection mechanisms for the innovation, such as patents, are possible (Kotlar et al., 2013). This further reflects the willingness to maintain a high level of control. See Table 3 for illustrations of these arguments and statements associated with this goal category. Considering the above, we propose:

P3. Family firms disclose fewer innovation goals than nonfamily firms in their acquisition deal announcements, since innovation is often linked to the need for external expertise and granting managers responsible for innovation greater autonomy, thus (a) family firms may prefer to retain their high level of control instead of innovating through acquisition, (b) such external expertise may also be perceived as a threat to noneconomic utilities, and (c) wealth concentration implies that family firms overall have fewer financial resources to invest in uncertain activities, such as innovation.

We return to the implications of Proposition 3 for future research in the discussion of Proposition 6 below.

Stakeholder goals include the workforce, long-term relationships, and service, the company’s position and reputation in the community, and the means of improving and fostering these. Compared to their nonfamily counterparts, family firms disclose more stakeholder-related goals in their announcements. This is due to wealth concentration, which can be preserved more easily in stable and benevolent communities (see Arregle et al., 2007). As a result, family firms are deemed to engage in more social behaviors (Campopiano, De Massis, & Chirico, 2014; Dyer & Whetten, 2006) to increase family reputation with their stakeholders (Gómez-Mejía et al., 2007). These concerns for reputation are linked to their willingness to foster dialogue with stakeholders and provide them benefits (Cennamo et al., 2012; Zellweger et al., 2013). In addition, proactive stakeholder engagement (Cennamo et al., 2012), establishing and maintaining good relations with external (Berrone, Cruz, & Gomez-Mejia, 2012) and internal (Zellweger et al., 2012) stakeholders, are important for family firms pursuing noneconomic goals. Indeed, multiple stakeholder goals are predominant for family firms and their reputation (Cennamo et al., 2012), which can be interpreted as a means of building social capital in stakeholder relationships (Sirmon & Hitt, 2003).

Moreover, the descriptive findings in this category in Table 2 show that family firms disclose more workforce goals than other stakeholder goals compared to nonfamily firms. This is due to noneconomic utilities, as family firms seek to build trust-based relationships with employees (Miller & Le Breton-Miller, 2005), which is crucial for their reputation (Zellweger et al., 2013). Noneconomic utilities further involve tacit knowledge (Duran et al., 2015), which acquiring family firms may want to preserve by establishing trust with the target firm employees, as there is a high risk of losing a talented workforce in acquisitions (Seo & Hill, 2005). Moreover, as employee welfare is a central concern in acquisitions and important for their success (Nemanich & Keller, 2007), by addressing employees in the statements, family firms may seek to reduce the distress linked to acquisitions by showing support and empathy, which further support noneconomic utilities. Indeed, employees in family firms are seen as a “pseudo-family” (König, Kammerlander, & Enders, 2013), as family firms foster loyalty and employee care in the workplace (Ward, 1988), and are highly concerned about their workers’ satisfaction (Donckels & Fröhlich, 1991). This is also reflected in the statements reported in the deal announcements (see Table 3 and the Appendix). In sum, stakeholder goals are not identified in previous studies on acquisition goals, despite that stakeholder influence in such strategic decisions is acknowledged (Angwin, 2007; Godfrey, 2005). Our evidence thus leads to the following propositions:

P4. Family firms disclose more stakeholder goals than nonfamily firms in their acquisition deal announcements, since (a) they seek to maintain wealth concentration, which is easier in stable communities, implying that they seek to increase stability and family reputation with their stakeholders, and (b) proactive stakeholder engagement is important for preserving the pursuit of noneconomic goals, and developing good relations with external and internal stakeholders.

P5. When family firms disclose stakeholder goals in their acquisition deal announcements, they concentrate more on employees than other types of stakeholders, since (a) due to noneconomic utilities, they seek to build trust-based relationships with employees, as these are crucial for the family firm’s reputation, and (b) addressing employees can reduce employee distress linked to acquisitions by showing support and empathy, further supporting noneconomic utilities.

Proposition 4 raises the point that the importance attached to stakeholder goals in company acquisitions may vary among firms with different ownership types. This extends and enriches both the efficiency and market power perspectives in the acquisition literature (Mukherjee et al., 2004; Chatterjee, 1991; Kim & Singal, 1993), suggesting that addressing stakeholders might bring undetermined benefits in acquisition efficiencies or market power at later stages through political favors, lowering social pressure (see Angwin, 2007), and promoting social responsibility (Godfrey, 2005).

Proposition 5 instead raises the point that the importance attached to stakeholder goals in company acquisitions may vary depending on the type of stakeholders addressed, such as employees or long-term partners, which may differ among firms with different ownership types. This enriches the synergy/efficiency perspective in the acquisition literature (Mukherjee et al., 2004; Hodgkinson & Partington, 2008), highlighting that types of stakeholder goals and their implications should be considered, as these may influence the realization of synergy/efficiency. For example, in some countries, such as Germany (Angwin, 2007), that have a high number of family firms (Stiftung Familienunternehmen, 2016), employee welfare is an important concern in acquisitions (Nemanich & Keller, 2007), as employee distress may hinder integration (Cartwright & Cooper, 1992) and synergy goals.

Resource goals refer to actions aimed at acquiring external resources, such as technology and management expertise, utilizing marketing or sales networks and manufacturing capabilities; overall, we do not find significant differences between family and nonfamily firms. Examining the distribution of single goals in this category as presented in Table 2, we find some descriptive differences. Family firms disclose fewer goals regarding distribution and marketing/sales network. One reason might be that they have advantages in managing and organizing their existing resources, i.e., “resource orchestration” (Sirmon, Hitt, Ireland, & Gilbert, 2011). This implies that family firms do not necessarily need to acquire resources through acquisition when they are able to efficiently deploy internal resources, such as firm-specific tacit knowledge and their networks (Duran et al., 2015; Sirmon et al., 2011). Further, as discussed above, acquiring external managerial expertise may be perceived as a threat to noneconomic utilities (Duran et al., 2015; Gómez-Mejía et al., 2007). As shown in Table 2, when family firms disclose resource goals, they concentrate on physical resources, such as manufacturing capacities and raw materials, preferring less variability in their investments (Anderson et al., 2012), which allows greater stability compared to more uncertain projects, such as innovation (Miller, Le Breton-Miller, & Lester, 2011), to maintain a high level of control.

Market competitiveness goals refer to a firm’s competitive situation in existing markets and geographic areas, and the goals in this category refer to actions aimed at changing and adapting to this situation. For example, companies may seek to achieve a leadership position in a given market, strengthen its market, country position, or core business through acquisitions.

We find that family firms disclose more goals concerning market competitiveness than nonfamily firms. Due to their high concentration of wealth, family firms are more sensitive to uncertainty (Bianco et al., 2013). Favoring existing markets in acquisition transactions may be seen as less risky, supporting the aim to maintain a high level of control and protect the pursuit of noneconomic utilities in family firms. Focusing on current business areas may be deemed to lower the risk linked to acquisitions, especially if the firm lacks the competent human capital needed for this type of risky investment (Sirmon & Hitt, 2003). Moreover, noneconomic goals imply that long-term survival of the business is an important priority for family firms (Gómez-Mejía et al., 2007), as strengthening their market position contributes to increased long-term profitability (Ghosh, 2004). Finally, according to Miller and Le Breton-Miller (2005), the objectives and subsequent actions of family firms center around long-term continuity strategies that help build capabilities and loyalty in a defined market. Thus, we propose:

P6. Family firms disclose more market competitiveness goals concentrating on current markets, countries, and synergies than nonfamily firms in their acquisition deal announcements, since (a) acquisitions in current markets can be seen as less risky transactions, supporting the aim to maintain a high level of control and protect the pursuit of noneconomic utilities in family firms, and (b) noneconomic goals drive family firms to prioritize the long-term survival of the business, as strengthening their market position contributes to increased long-term profitability.

In examining market power goals in acquisitions, Propositions 3 and 6 point to the importance of taking into account the degree of “newness” of the products and/or markets, since new versus existing products and/or markets may have different implications in motivating the acquisition of firms with different ownership structures. This extends the market power perspective in the acquisition literature (Chatterjee, 1991), showing that firms with different ownership types express different priorities regarding the newness of products and/or markets versus existing ones.

Strategy goals relate to the firm’s strategic actions, orientation, position, and changes thereof, such as internal strategic reorganization. Other goals concern the acquisition partners, such as their strategic and cultural fit, synergies, market access, niche or specialization, or preventing a hostile takeover. No significant differences emerged between family and nonfamily firms, which may be due to the fact that these goals are universal, and thus important in any acquisition transaction, regardless of family influence, for instance, goals related to the fit between deal partners, market access, and restructuring.

Expansion goals refer to generic growth and the commercialization of new products and services. When firms seek to expand their product portfolio, gain access to a new geographic area, or diversify, their goals fall within this category. Our findings do not indicate significant differences between family and nonfamily firms with respect to these goals. In prior literature, no consensus has been reached on whether family firms differ from their nonfamily counterparts in terms of expansion (e.g., the contradictory findings of Caprio et al. (2011) and Zahra (2003)). Achieving and promoting firm growth is one of the main goals of an acquisition (Bower, 2001; Calipha, Tarba, & Brock, 2010), and it is thus reasonable to expect that the expansion goals category applies to all acquisitions and firms, regardless of family influence. Although no differences emerge between family and nonfamily firms in this goal category, the specific goals disclosed in Table 2 show some differences in relation to the diversification goal. In fact, family firms appear to disclose more diversification and growth goals. Family firms may use diversified acquisitions as a means of lowering the investment risk linked to highly concentrated wealth and to protect noneconomic utilities. When engaging in acquisitions, family firms are found to diversify more to spread the risk (Miller et al., 2010), and concentrate on niche industries where competition is generally less intense (Simon, 2009). An additional reason to diversify more in acquisitions is to protect the company from a hostile takeover (Patel & King, 2015).

4.3. Contingencies for the influence of listing, size, industry, legal environment, and deal type on acquisition goals

The results of the z-tests and contingencies are presented in Table 4. In the finance goal category, the effect of disclosing more financial goals applies to both listed manufacturing firms and SMEs, as well as firms in a high shareholder protection environment, consistent with our findings.

In the innovation goal category, we find that listed and non-listed nonfamily firms disclose more innovation goals in their deal announcements than family firms.

In the stakeholder category goals, listed, manufacturing, and large family firms disclose more of these goals compared to their nonfamily counterparts. In the case of manufacturing firms, this may be due to the fact that manufacturing sites may be seen negatively by the surrounding community, and firms may wish to communicate the positive effects to the community and strengthen the firm’s and the family’s positive image (Campopiano & De Massis, 2015). This effect is also significant for cross-border and overseas deals. Cross-border acquisitions are deemed beneficial for the acquirer’s shareholders and lead to synergy gains (Eun, Kolodny, & Scheraga, 1996), and family firms may wish to highlight this to stakeholders. This effect also applies for family firms in environments with high shareholder protection. Family firms disclose more market competitiveness goals than nonfamily firms also in most of our subsamples, i.e., non-listed and manufacturing firms, both large firms and SMEs, cross-border deals, and acquirers in low-protection environments.

5. Discussion

Our study shows that ownership type is an important determinant of acquisition goals. Specific family firm characteristics, namely, high level of control, wealth concentration, and noneconomic utilities (Duran et al., 2015), distinguish this form of business organizations from their nonfamily counterparts, and influence the goals they disclose in deal announcements. Our research questions asked which goals family firms disclose in their deal announcements and whether they differ from those of nonfamily firms. Our findings reveal seven categories of goals disclosed in deal announcements. Most importantly, we find that family firms disclose more goals related to stakeholders and market competitiveness than nonfamily firms, and fewer financial and innovation goals. Family firms want to protect and maintain control over their firm, and seem to prefer developing innovation through internal resources and by other means than acquisition. Due to wealth concentration, they are more sensitive to uncertain investments (Anderson, et al., 2003; Bianco et al., 2013), hence not pursuing acquisitions to fulfill, for example, their financial or innovation goals. Wealth concentration implies family firms are more long-term oriented in their financial strategies (De Massis, Audretsch, Uhlaner & Kammerlander, 2018; Molly et al., 2018), prioritizing long-term survival over short-term financial gains. Due to their noneconomic utilities, family firms place less emphasis on financial goals but more on relationships with stakeholders in their deal announcements. The primary goal for family firms to expand their business appears to be based on a strategy of continuity that allows building enduring relationships, sustaining the business for future generations, and providing a high level of risk reduction (Miller et al., 2010).

Prior literature characterizes most acquisitions as having either efficiency, market power, or opportunistic goals (e.g., Arnold & Parker, 2009; Berkovitch & Narayanan, 1993; Garzella & Fiorentino, 2014; Hodgkinson & Partington, 2008; Seth et al., 2000; Sheen, 2014). Efficiency and market power are also present in family firms’ disclosed goals, but we find that family firms concentrate more on profitability than growth, in line with efficiency theory. Regarding market power, we find that family firms disclose more market competitiveness goals, such as strengthening their country and market position, and achieving a leadership position. Due to the nature of our data, agency and managerial hubris are not explicitly disclosed in the statements, as such negative evaluations are rarely made public by the firms themselves. The literature has examined these issues by measuring post-acquisition performance, assuming that negative returns are a result of opportunistic behavior and overpayment. As our study does not measure performance, triangulation would be needed to examine opportunistic behavior in acquiring family firms. Some studies extend these major perspectives by offering additional categories (Angwin, 2007; Bower, 2001; Walter & Barney, 1990), highlighting the variety of goals and the need for a broader set of goals to capture the nature and variety of acquisition goals, combining managerial intentions, strategic preferences, and environmental pressures. These studies further point to the need to examine acquisition goals of firms with different ownership types. Furthermore, Cartwright et al. (2012) call for more studies examining acquisitions with qualitative methods, especially using an inductive approach to enhance theory.

Our study has a number of theoretical and practical implications. First, we extend family business literature by showing that the distinctive characteristics of family firms influence the goals driving their strategic actions, such as acquisition behavior. Second, we enrich research on family business goals by specifically examining the goals that family firms disclose in acquisitions, providing a fine-grained understanding of what distinguishes these from the acquisitions goals of nonfamily firms. In so doing, we show that due to wealth concentration, high level of control, and noneconomic utilities, family firms disclose more goals regarding stakeholders, long-term continuity, physical resources, and competitiveness in existing markets, and fewer short-term financial and innovation goals. Third, our study extends prior research on family business acquisition activity, which has looked at the propensity, process, and performance associated with acquisition, but overlooking the motivations and intentions that drive family firms when engaging in acquisitions. Fourth, our study complements the acquisition literature. We show that ownership type is an important antecedent of acquisition goals and thus acquisition behavior, stressing the importance of examining the acquisition goals and their heterogeneity in relation to different governance archetypes, especially regarding noneconomic goals, an aspect largely neglected in prior research. Specifically, our study extends the literature on acquisition goals in a number of ways. Our findings point to the importance of distinguishing between different types of synergies, such as financial and managerial synergies, when examining acquisition goals instead of treating them as equal (Seth et al., 2000), indicating differences among firms with different ownership types. Furthermore, our findings point to the importance of considering the time orientation when examining financial synergies. Our findings further highlight the need to examine the newness of markets and/or products when examining market power goals in acquisitions, showing that this has very different implications for family and nonfamily firms. Finally, our finding on nonfinancial goals in acquisitions, especially stakeholder goals, adds to the literature on general acquisition goals. Stakeholder goals have not emerged in previous studies, despite the acknowledged importance of stakeholder preferences in acquisitions (Angwin, 2007). Finally, we contribute to the acquisition literature by examining company statements reported in deal announcements using a qualitative approach supported with statistical tests. This is rare in acquisition literature, despite that the content analysis of statements reported in deal announcements can provide insights not derivable from numerical data (Davis, Piger, & Sedor, 2012). Such analysis adds substantial richness to the existing body of evidence (Cicon et al., 2014; Vandenberghe, 2011). In this regard, our study’s findings complement the results of quantitative studies with a more nuanced view of different types of acquisition goals according to different ownership types.

This study has implications for managers working in family firms and practitioners aiming to support family firms in acquisition transactions, as our findings highlight the importance of recognizing the family firm-specific acquisition goals. Practitioners are advised to not presume the universal applicability of acquisition procedures, but to carefully analyze the influence of the distinctive acquisition goals on the particular transactions.

Acquisition announcements generally target a broad external audience, which enables the firm to identify with and relate to a larger business community (McKenny et al., 2011). However, as family firms may be viewed with skepticism by professional investors due to their perceived non-economic goals (Claessens, Djankov, Fan, & Lang, 2002), our findings suggest that such negative associations might be circumvented if family firms use deal announcements aimed at external stakeholders that communicate their economic goals (Kotlar & De Massis, 2013; Miller, Le Breton-Miller, & Lester, 2013; McKenny et al., 2011).

5.1. Limitations

As in all studies, we acknowledge some limitations, which also provide opportunities for future research. First, this study uses acquisition announcements reported in press releases accompanying the acquisition process. These deal announcements generally target a broad external audience and seek to reassure external stakeholders that strategic decisions are an outcome of economic rationales. However, these statements may deliberately disguise the noneconomic utilities of family firms in acquisition considerations, and this should be taken into account when interpreting our study’s findings. Furthermore, although prior studies show that disclosure announcements have information content (Davis et al., 2012; Kimbrough & Wang, 2014; Kothari, Li, & Short, 2009; Lopatta, Jaeschke, Tchikov, & Lodhia, 2017), we recognize that the extent to which the information disclosed is accurate and whether firms actually implement what they state they intend to do can vary. Additional studies may be warranted to explore whether family firms, due to their closely held ownership structure, have greater leeway in this regard than non-family firms. However, previous studies applying content analysis to press releases find that their wording and tone influence market reactions (Davis et al., 2012; Kimbrough & Wang, 2014) and it may be the case that the market sees through behavior in press announcements designed to hide or mislead intentions and punishes firms accordingly. Future studies could consider additional sources of information to explore acquisition goals, such as annual reports, or combining primary and secondary data sources.

A second limitation refers to family firm heterogeneity (Chua, Chrisman, Steier, & Rau, 2012). In line with literature showing differences in family firm goals compared to their nonfamily counterparts (e.g., Chrisman et al., 2012; Williams et al., 2018), our focus is on goal differences between family and nonfamily firms. However, some heterogeneity in goals among family firms may also exist (e.g., De Massis, Kotlar, Mazzola, Minola, & Sciascia, 2016). Future endeavors could usefully explore potential drivers of heterogeneity among family firms, such as family and business size, level of family involvement, presence of a family CEO, duration of family ownership, and their effect on acquisition goals. This would imply taking into account key contingent factors determining the heterogeneity of family firm behaviors (Chua et al., 2012). For instance, previous studies show that a distinction has to be made between active and passive family influence (Maury, 2006; Schmid, Achleitner, Ampenberger, & Kaserer; 2014), and the level and type of this involvement (Matzler, Veider, Hautz, & Stadler, 2015). Likewise, different levels of family involvement might shape the extent to which family-related goals are deliberately omitted in organizational announcements targeting outside stakeholders (Miller et al., 2013). Family firms may thus pursue strategic goals with acquisitions that serve family-specific goals (and not so much business-specific goals. Future empirical studies may thus examine whether different types and levels of family involvement shape acquisitions in general, and the organizational announcements accompanying these activities. Such research may also involve a broadening out or refocusing of the unit of analysis on the family and its goals and aspirations (LeBreton-Miller & Miller, 2018). Overall, we encourage scholars to take more fully into account the microfoundations of the family system (De Massis & Foss, 2018) to understand nuances in the acquisition goals disclosed by different family firms. Firm size could also be a contingency factor of family firm heterogeneity. For instance, Patel and King (2015) find that medium-sized family firms are likely to engage in related acquisitions instead of diversifying. We distinguish between large firms and SMEs in our samples, but do not distinguish between small- and medium-sized firms, which could be the subject of future research efforts.

A third limitation concerns the ownership structure of target firms. Due to data limitations, we were only able to control for differences in goals in 22% of targets. However, we found no significant differences. We encourage future researchers to include this dimension in their analyses, as this might also have implications for goals, and contribute to understanding the perceived cultural fit, which is found to positively affect acquisition success (Bauer & Matzler, 2014).

Fourth, addressing whether different acquisition goals impact post-acquisition success is beyond the scope of this study. As previous research shows, evidence on family and non-family firms’ acquisition performance is mixed, which may indicate other preferences altogether regarding acquisitions; it would be important to address this in future studies, as performance is shown to relate to goals (Chua, Chrisman, De Massis, & Wang, 2018). For example, future research could investigate whether particular announcements are linked to post-acquisition success or failure. Such analyses would be especially useful since, while general evidence shows that a substantial number of acquisitions are not financially successful (Cartwright, 2005; Cartwright & Schoenberg, 2006), they may be deemed successful if judged by whether they meet other goals. Utilizing the “soft” information reported in deal announcements regarding acquisition goals would help extend prior literature on acquisition goals, which has tended to rely on hard financial data (Berkovitch & Narayanan, 1993; Seth et al., 2000, 2002).

Finally, our study focuses on acquisitions, which differ from mergers in terms of implications for dilution of control. Future studies could focus on mergers, or on both mergers and acquisitions, thereby shedding light on whether and how the implicatio