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The structuring and performance implications of entrepreneurial acquisitions

Ragozzino, Roberto
http://rave.ohiolink.edu/etdc/view?acc_num=osu1083705543

Abstract Details

2004, Doctor of Philosophy, Ohio State University, Business Administration.
Three essays investigate the importance of accounting for firms’ and transaction level characteristics in the study of M&A priors and outcomes. Chapters 2 and 3 bring together the entrepreneurship literature and work on M&A to explain how the evolutionary patterns of acquirers can lead them to make different acquisition decisions and experience different outcomes. Chapter 4 departs from the direct comparison of new and established acquirers, and focuses on the role of contingent earnouts as a contractual feature in M&A. In chapter 2, a sample of 409 domestic acquisitions is considered. The results show that new ventures do not experience different mean M&A performance, but they face unique difficulties and opportunities in conducting acquisitions. For example, they are more likely to experience problems due to information asymmetry, partly due to their lower levels of M&A experience. Further, they appear to be better positioned to purchase firms with intangibles and growth prospects than established acquirers, as these targets represent better fits, which facilitates the cultural integration process following a deal. Unlike the sample used in Chapter 2, Chapter 3 focuses only on M&A transactions in the high-tech sector. Drawing from a sample of 445 deals, the evidence shows that equity markets responded less favorably to the announcements of acquisitions by new ventures than by established bidders. However, the former experienced better returns when they acquired private targets. Taken together, Chapters 2 and 3 demonstrate that M&A challenges shift in qualitative and systematic ways as firms evolve, and therefore that it is necessary to account for the differences between new and established firms in future M&A studies. Chapter 4 draws from a sample of 2058 domestic M&A deals. The question is whether contingent earnouts can act as contractual alternatives to governance remedies to the problems posed by asymmetric information in corporate acquisitions. The evidence indicates that acquirers are more likely to rely upon earnouts when purchasing private firms, new ventures, and targets situated in industries with dissimilar knowledge requirements. The results also show that earnouts and shared ownership can offer substitute remedies for adverse selection in corporate M&A.
Jay Barney (Advisor)
acquirers; new ventures; firms; earnouts; ventures; ACQUISITIONS; bidders

Recommended Citations

Citations

  • Ragozzino, R. (2004). The structuring and performance implications of entrepreneurial acquisitions [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1083705543

    APA Style (7th edition)

  • Ragozzino, Roberto. The structuring and performance implications of entrepreneurial acquisitions. 2004. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1083705543.

    MLA Style (8th edition)

  • Ragozzino, Roberto. "The structuring and performance implications of entrepreneurial acquisitions." Doctoral dissertation, Ohio State University, 2004. http://rave.ohiolink.edu/etdc/view?acc_num=osu1083705543

    Chicago Manual of Style (17th edition)

osu1083705543
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© 2004, all rights reserved.
This open access ETD is published by The Ohio State University and OhioLINK.