In their recent PE Hub article, Goodwin partner Carl Bradshaw and counsel Angus Simpson explain that the acquisition of a family- or founder-owned business presents unique challenges for private equity investors that extend beyond the usual commercial and structural considerations and cannot always be resolved through purely financial incentives. For this type of seller, a buyout is not merely a liquidity event but a deeply personal decision about entrusting their legacy to new custodians, and they often seek assurances from the investor that they will preserve the essence of what they have built.
While these requests are often well-intentioned, they can create significant legal and commercial complexities for investors who must balance respect for the seller’s legacy with the practicalities of operating a business in dynamic market conditions and their own duties to maximize returns. For example, commitments that involve capital or operational expenditure (e.g., maintaining legacy products, services, or office locations and/or employees; contributing to heritage or charitable foundations) can create a drag on returns, while those that fetter the board’s freedom to respond to market changes, competitive pressures, or operational challenges (e.g., maintaining environmental or ethical trading practices; restrictions on dealings with certain types of customers, suppliers, or workers) may give rise to conflicts with laws and the business’ contractual undertakings.
Read the full analysis: “Strings attached: navigating legacy with founder and family transitions” (PE Hub)
This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.
Contacts
- /en/people/b/bradshaw-carl
Carl Bradshaw
Partner - /en/people/s/simpson-angus
Angus Simpson
Counsel