Pre-Acquisition Profile of Privately Held Companies Involved in Takeovers: An Empirical Study

34 Pages Posted: 20 Nov 2000

See all articles by Jan Camerlynck

Jan Camerlynck

Sofindev Private Equity

Hubert Ooghe

Vlerick Business School; Ghent University - Department of Accountancy and Corporate Finance

Date Written: June 2000

Abstract

This study addresses the pre-acquisition financial characteristics of privately held acquiring and acquired companies involved in 143 Belgian takeovers between 1992 and 1994. Specifically, the research examines the profitability, liquidity, financial structure, added value and failure risk using statistical analysis of industry-adjusted variables. Our findings show that acquisition is not an alternative to bankruptcy since acquired companies do not report high failure risk, but exhibit higher than industry liquidity and solvency. The acquirers achieve a higher growth rate in total assets and sales than the acquired firms but experience a negative industry-adjusted liquidity and are highly levered, suggesting evidence for a growth-resource mismatch or a financial fit between acquirers and their targets.

Suggested Citation

Camerlynck, Jan and Ooghe, Hubert, Pre-Acquisition Profile of Privately Held Companies Involved in Takeovers: An Empirical Study (June 2000). Available at SSRN: https://ssrn.com/abstract=245650 or http://dx.doi.org/10.2139/ssrn.245650

Jan Camerlynck (Contact Author)

Sofindev Private Equity ( email )

Green Square, Lambroekstraat 5 D
Diegem, B-1831
Belgium

Hubert Ooghe

Vlerick Business School ( email )

Reep 1
B-9000 Gent
Belgium

Ghent University - Department of Accountancy and Corporate Finance

Kuiperskaai 55 E
B-9000 Ghent
Belgium

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