Firm Valuation Effects of High-Tech M&A: A Comparison of New Ventures and Established Firms
35 Pages Posted: 24 Aug 2005
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Firm Valuation Effects of High-Tech M&A: A Comparison of New Ventures and Established Firms
Firm Valuation Effects of High-Tech M&A: A Comparison of New Ventures and Established Firms
Date Written: June 2006
Abstract
We examine whether the unique attributes of new ventures lead these firms to experience different M&A outcomes vis-a-vis established organizations. Drawing from a sample of acquisitions of high-technology firms, we present results showing that newly incorporated acquirers experience lower average performance in general, as well as when the target is itself a new venture. Yet, we find that new ventures outperform established firms when the target is a privately-held company. Overall, the findings demonstrate that the challenges and opportunities of firms shift through the first few years of their existence and these changes directly affect the M&A outcomes of acquirers.
Keywords: Entrepreneurship, high tech, acquisition, performance
JEL Classification: G3, M13
Suggested Citation: Suggested Citation
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