TY - JOUR
T1 - Theory and evidence on mergers and acquisitions by small and medium enterprises
AU - Weitzel, Utz
AU - McCarthy, Killian J.
PY - 2011/8/1
Y1 - 2011/8/1
N2 - The theory of mergers and acquisitions (M&As) has been developed almost exclusively from the study of large deals by large firms. In this paper, we argue that the behaviour and success of M&As by small and medium sized enterprises (SMEs) may be significantly different. Accordingly, we revisit established M&A theories and develop a theoretical framework and several testable hypotheses, regarding the distinctive features of SME M&As. Our empirical results support our expectations and show that, compared to large firms, acquiring SMEs rely more intensively on external growth via M&As, are more likely to be withdrawn, suggesting that SMEs are more flexible and more able to avoid deals that turn sour. Finally, SME M&As are more likely to be financed with equity rather than debt, indicating that the influential financial pecking order theory is of less relevance to SMEs.
AB - The theory of mergers and acquisitions (M&As) has been developed almost exclusively from the study of large deals by large firms. In this paper, we argue that the behaviour and success of M&As by small and medium sized enterprises (SMEs) may be significantly different. Accordingly, we revisit established M&A theories and develop a theoretical framework and several testable hypotheses, regarding the distinctive features of SME M&As. Our empirical results support our expectations and show that, compared to large firms, acquiring SMEs rely more intensively on external growth via M&As, are more likely to be withdrawn, suggesting that SMEs are more flexible and more able to avoid deals that turn sour. Finally, SME M&As are more likely to be financed with equity rather than debt, indicating that the influential financial pecking order theory is of less relevance to SMEs.
KW - Acquisitions
KW - Mergers
KW - Small and medium sized enterprises
KW - SMEs
UR - http://www.scopus.com/inward/record.url?scp=80155130486&partnerID=8YFLogxK
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U2 - 10.1504/IJEIM.2011.041734
DO - 10.1504/IJEIM.2011.041734
M3 - Article
AN - SCOPUS:80155130486
SN - 1368-275X
VL - 14
SP - 248
EP - 275
JO - International Journal of Entrepreneurship and Innovation Management
JF - International Journal of Entrepreneurship and Innovation Management
IS - 2-3
ER -