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

Mikkelsen, Paul LU and Järlefelt, Joachim LU (2026) MGTN59 20261
Department of Business Administration
Abstract
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... (More)
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. (Less)
Please use this url to cite or link to this publication:
author
Mikkelsen, Paul LU and Järlefelt, Joachim LU
supervisor
organization
course
MGTN59 20261
year
type
H1 - Master's Degree (One Year)
subject
keywords
Private equity governance, Founder-Led firms, Governance adaptation, Organizational sensemaking, Institutional translation, Founder-CEO transition, Abductive qualitative study
language
English
id
9244633
date added to LUP
2026-06-29 14:48:19
date last changed
2026-06-29 14:48:19
@misc{9244633,
  abstract     = {{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.}},
  author       = {{Mikkelsen, Paul and Järlefelt, Joachim}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Beyond the Deal: How Founder-Led Firms Interpret and Adapt to Private Equity Governance}},
  year         = {{2026}},
}