We study the reluctance of family firms to accept private equity (PE) investors and the impact of PE on family firms' performance. We analyze the productivity growth in a sample of 257 PE‐backed family firms, 143 of which were run by the founding generation. We compare these firms with both non‐PE‐backed family firms and non family PE‐backed firms. We find that family firms accessing PE show lower productivity growth before the initial PE round, which is driven by an imbalance between inputs and output, especially in founder‐controlled firms. Our results also confirm the positive impact of PE involvement on productivity growth in founder‐controlled firms.