The Show Must Go On: Preserving the Legacy Business through Exit in Family Business Portfolio Firms

We explore business exits in four family business portfolio firms located in Pakistan. Our research objective is to understand why, when facing an unexpected situation that violates their expectations (e.g., a decline in firm performance), the owners of family business portfolio firms are more likely to retain some businesses in the firm’s portfolio while choosing to exit from one or more other businesses. Results from our qualitative analyses reveal that family business portfolio firm owners prioritize protecting the firm’s legacy business, even if it is underperforming, over pursuing potential future opportunities in satellite businesses, including successful ones. This paradoxical approach can ultimately place the overall business at risk. Our results provide insights regarding the roles of sensemaking and emotions when family business portfolio firm owners identify, evaluate, and then select a course of action to pursue to deal with an unexpected event. We observe that the owners of the family business portfolio firms in our sample engage in a sensemaking process that shapes their understanding of how their emotions of guilt, sadness, and fear—and their related emotional attachment to the firm’s legacy business—affect their business exit decisions.