What PE and family businesses can learn from each other
- Marion Heil
- vor 21 Stunden
- 5 Min. Lesezeit
I wrote a piece a while back about the leadership gap between private equity and public companies, and a few readers asked the same question afterwards: what about family businesses, arguably the biggest governance culture in the DACH region, and neither of the two worlds I'd described. That question, combined with some of the thinking behind my latest piece on family governance, is where this one started.
Picture two companies from the same sector sitting across the table from each other during an acquisition talk. One is backed by a private equity fund, three years into a five-year hold, every decision measured against a clear exit timeline. The other is family-owned, third generation, run by people who talk about the business the way you'd talk about a piece of land that's been in the family for a hundred years. Both sides are serious, competent, and well advised. And within the first hour, it's obvious they're not just negotiating a price. They're negotiating between two very different ideas of what good governance looks like.
That gap gets talked about constantly in the abstract, patient family capital versus disciplined financial capital, but it's worth being specific about what each side is actually good at, and where the other one has something real to learn.
The friction point that explains almost everything else
PwC ran a study a couple of years ago, together with the German private equity association BVK, asking family businesses and PE investors how they feel about working with each other. The headline number is striking on its own: openness to a PE partnership among family businesses has gone from 18 percent in 2011 to 90 percent today. Interest from the investor side sits at close to 100 percent. On paper, this should be a booming market.
It isn't, and the same study explains why. The majority of family businesses surveyed, 54 percent, said they'd only consider a minority stake. Private equity, as a model, is built around majority ownership, because that's what gives a fund the control it needs to execute its plan on its own timeline. Both sides want to work together. Almost nobody wants to give up what the other side needs to make the partnership function the way it's used to functioning. That single mismatch, control versus timeline, is really the whole story compressed into one statistic.
What family governance tends to get right
"Will this look defensible in twenty years, not just profitable in three?"
The instinct in a family-owned business is to protect the company's standing over a horizon nobody in a five-year fund cycle is incentivised to think about. Decisions get filtered through a question PE structures rarely ask explicitly: will this look defensible in twenty years, not just profitable in three. That's not sentimentality. It shows up as real discipline, a reluctance to over-leverage, a willingness to hold a decision until consensus is genuinely there rather than force a vote, an instinct to protect relationships with suppliers, employees, and local communities that a fund might treat as negotiable line items.
The weakness sits right next to the strength. Consensus that takes years to build can also mean a board that never quite says no to anyone in the room, and a governance structure that was assembled once, informally, and never stress-tested against the kind of scrutiny an outside investor would bring on day one.
What private equity tends to get right
A PE-backed board runs on a rhythm most family businesses would find uncomfortable.
A PE-backed board runs on a rhythm most family businesses would find uncomfortable: monthly reporting against a small number of hard metrics, a board that's expected to challenge management directly rather than defer to whoever founded the company, and a governance structure that was built deliberately, with defined roles, rather than inherited from whoever happened to be trusted at the time. None of that is a philosophy so much as a set of habits, but they're habits that catch problems early precisely because nobody's protected from being questioned.
The weakness is the mirror image of the family strength. A fund's board is disciplined because it's temporary, and a governance structure built for a five-year hold doesn't always transfer cleanly to a company that's supposed to still exist in fifty years. Decisions optimised for a clean exit aren't always the same decisions a business would make if it expected to answer for them for another two generations.
What each side could borrow
Family businesses don't need to import private equity's exit discipline. They need the reporting rhythm and the willingness to have a board that pushes back, without importing the five-year clock that makes those habits necessary in the first place. A foundation or advisory board that meets the way a PE board meets, with hard numbers, direct challenge, and a genuine mandate to say no, can keep the long horizon and still catch the kind of drift that consensus-driven governance tends to miss.
Family offices now account for around 15 percent of all private equity investments globally.
This isn't hypothetical. Family offices now account for around 15 percent of all private equity investments globally, up from a much smaller share not long ago, and increasingly as direct deal leads rather than passive capital handed to a fund manager. To do that credibly, they've had to build the same discipline they used to outsource: dedicated deal teams, structured governance, reporting cadences that would have looked foreign to a family office a decade ago. The borrowing is already happening. It's just happening quietly, on the family side, without anyone calling it that.
Private equity, for its part, has less to gain from copying family patience wholesale, since the model depends on the discipline of an exit. But the pattern-recognition question a family business asks by habit, will this decision still look right a decade from now, is worth borrowing even inside a five-year frame. A portfolio company that's only ever optimised for the next reporting cycle tends to arrive at exit with exactly the kind of fragility that shows up in due diligence and costs money at the one moment it matters most.
Let's go back to those two companies at the negotiation table. A few years on, imagine the deal actually happened. The PE fund kept its board rhythm, the monthly numbers, the direct questions nobody used to ask out loud. The family kept its seat, and its instinct for what the business would still need to be true a generation from now. Neither side got to keep everything the way it was. But the company that came out the other end had a board that could move fast and still remembered to ask the question a five-year clock usually forgets.
ABOUT THE AUTHOR
Marion Heil is founder and managing partner of Board+CEO Advisors, a Vienna-based executive search and board advisory boutique. She advises listed companies, family businesses and investors on C-suite, leaders and supervisory board appointments across DACH and CEE.
A note on where this comes from
I work as an executive search consultant, and I sit close to both worlds: placing board and leadership talent into family businesses and into PE-backed companies, sometimes for the same client at different points in its life. The comparison here comes from that vantage point, not from a formal academic study of either model. Every fund and every family business is different enough that broad comparisons like this one are a starting point for thinking, not a rule that applies cleanly to any one situation.
