Chapter 6: Exit Preferences in Family Businesses

This research tests a model that links stakeholder focus and the business strategy of family businesses with exit preferences. Using a mail questionnaire, data was collected from a sample of 437 firms in Hong Kong, Singapore, the United States, and Canada. After controlling for differences in the size of the firm, age of the firm, and institutional contexts of 4 countries, the results indicated that in family businesses, the incumbent chief executive officers’ (CEOs) exit preferences are guided by having a family focus as well as a low-cost strategy. Among the exit preferences favored by CEOs of family businesses, succession by a family member was most preferred, followed by succession by an outsider, and lastly an initial public offering (IPO) with minority shareholding. There were no statistically significant drivers to family business CEOs preferring to exit by selling the business completely, through an IPO with majority holding in the business, or closing the business.