How Owners’ Emotions Shape Small Family Firms’ Selling Price Perceptions

Abstract

Planning for business succession is a challenging process. For non-family successors, small family firm owners typically demand a sale price, which they specify based on personal experiences with and feelings toward their firms. However, their price perceptions typically do not represent the firm’s market value, which leads to failed transactions. Research studies selected emotions and lacks a measurement framework to quantify their impact on selling-price perceptions. Our study contributes to the literature by developing, validating, and preliminarily testing a new scale, which we denote the individual price indicator. To this end, we develop the proposed scale by analyzing 115 peer-reviewed papers in terms of emotional aspects and systematizing the corresponding results. We further validate the scale in two qualitative and two quantitative studies. Lastly, we provide a first test of the scale on owners’ willingness to accept lower sales prices. Our results evidence the scale’s usefulness to facilitate an owner’s business valuation practices.