Controlling shareholder groups of family firms which authorize acquisitions are spending their own capital. They are therefore inclined naturally to husband their own and their family’s capital as they are committed to bidding for a target company – a propensity that tends to ensure that they avoid overpaying. When added to the higher degree of certainty that the management of a target that the acquirer wants to retain is more likely to remain with a new ownership group that engenders trust, such frugality acts as a natural check against auction fever.

The risk of relying on this inherently conservative pricing constraint is that sound financial analysis, which suggests paying a fair market price (ie, one closer to retail), may be misinterpreted as suggesting that the buyer overpay for the acquisition.