Abstract
We compare the agency costs of family firms prior to a sale to outside parties with the agency costs after a management buy-out or buy-in by non-family investors. The agency costs of a family firm before a sale influence firm value and the potential changes in agency costs after a sale influence the ability of a management buy-out or buy-in to improve firm profits. In transitions from family to non-family ownership, post-sale agency costs are path dependent and contingent. We present a framework and propositions detailing pre- and post-sale agency issues as they affect firm value and profits.