We investigate factors that influence family business owners' choice between passing ownership within the family or to new external owners. Taking an embeddedness perspective focusing on owner-family structure and involvement, we hypothesize that ownership dispersion, number of potential heirs, multigenerational involvement, and whether the chief executive officer is a family member influence the choice of an internal or external transition of ownership. We build a longitudinal data set from a sample of 3,829 family firms and their ownership transitions. Our theorizing and findings regarding ownership transitions complements the abundant research on management succession and therefore constitutes an important contribution to the literature.