Family firm succession: Lessons from failures in external party takeovers

•We investigate external-party takeovers through ten in-depth interviews (sellers/acquirers).•We used narrative techniques and interpretative approach.•We introduce cognitive biases in the study of external-party takeovers.•We identified five managerial errors associated with cognitive biases.•We identified symptoms associated with cognitive biases.

This article focuses on the role of cognitive biases in failed external party takeovers. Our central issue is to understand how and to what extent external acquirers’ cognitive biases could lead to managerial errors in small- and medium-sized external party takeovers. Our sample comprises five failed takeovers. We used narrative techniques and an interpretative approach through in-depth qualitative interviews conducted with both sellers and acquirers. Our study allows us to identify five common managerial errors that are associated with external acquirers’ cognitive biases.