Beyond the Deal: How Founder-Led Firms Interpret and Adapt to Private Equity Governance

Sammanfattning

Private equity (PE) investment changes not only who owns firms but also how they are governed. In founder-led firms, this transition is particularly complex because authority, decision-making, and organizational identity are closely tied to the founder. Existing research explains private equity governance primarily through monitoring and value-creation mechanisms, but less is known about how the introduction of governance mechanisms is actually interpreted by the individuals who work within those portfolio companies. This thesis examines the internal transition through an abductive qualitative study, drawing on expert informants from seven accounts across five founder-led company contexts, one non-founder contrast context, and one investor-side perspective, spanning a range of European PE transactions. Drawing on translation theory and organizational sensemaking, the study develops and extends a Governance Adaptation Framework to explain why similar governance changes produce different adaptation outcomes. The findings show that adaptation is shaped by six conditions, namely, pre-investment governance maturity, perceived value of PE resources, integration intensity, founder transition readiness, investor-founder relational fit, and internal authority redistribution. The study introduces sensemaking direction as a temporal variable that determines whether adaptation stabilizes or breaks down over time, and establishes organizational autonomy as a structural prerequisite for governance translation rather than merely a contextual condition. The thesis contributes a conditional framework for understanding when and how PE governance formalization supports or disrupts the operating logic that made the founder-led firm valuable before investment.