Theory and Evidence on Mergers and Acquisitions by Small and Medium Enterprises

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that, compared to large firms, acquiring SMEs: rely more intensively on external growth via M&As; are more likely to be withdrawn, suggesting that SMEs are more flexible, and more able to avoid deals that turn sour; and, finally, SME M&As are more likely to be financed with equity rather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.mergers, acquisitions, small and medium sized enterprises

On the influence of the European trade barrier on the CHinese pv industry:Is the solution to the solar-dispute "successful"?

AbstractIn July 2013 the European Union (EU) imposed restrictions on Chinese solar photovoltaic (PV) manufacturers, looking to exporting to the EU. In this paper, we consider the impact of this trade barrier, using a sample of 454 stock-listed PV producing firms. We find that the trade barrier erased US$8,19 million off the value of the average European PV manufacturers and US$ 247.03 million off the value of the average Chinese PV manufacturers. We also find that while the trade barrier reduced the willingness of the industry to reorganise, it stimulates Chinese manufacturers to reorganise both their domestic and their international operations. The latter, we warn, is likely an attempt by Chinese manufacturers to ‘tariff jump’. We conclude, therefore, that the trade barrier was both inefficient, in that it both hurt the companies it aimed to protect, and ineffective, as those it sought to punish may have circumvented it

Too many cooks spoil the broth:on the impact of external advisors on mergers and acquisitions

Almost 60% of mergers and acquisitions are concluded with the aid of multiple third-party advisors. While there has been work on the impact of advisors, the theoretical and empirical implications of using multiple advisors remain unclear. Using insights from the "cheap talk" literature, we derive hypotheses on the impact of multiple advisors. Expanding upon this, we then consider the moderating impact of advisor reputation/quality and deal timing (in terms of merger wave periods vs. non-merger wave periods), as factors that both the cheap talk and the literature on single advisors highlight as relevant. We test our hypotheses using a sample of 10,544 large US acquisitions, and evaluate the impact of advisors using an event study and abnormal returns. Our results support a value-creating role for single advisors-we find that deals with single advisors create a higher expectation of value-creation-but find little support for the use of multiple advisors. Furthermore, we show that the moderating effect of advisor reputation, and deal timing, are contingent on the number of advisors. In doing so, we make a number of academic and practical contributions to the discussion of advisors in mergers and acquisitions

Alliance-to-acquisition transitions:The technological performance implications of acquiring one's alliance partners

Drawing on organizational learning theory, we investigate the technological performance implications of acquiring one's alliance partners. We do so using a sample of 252 firms in four high tech industries, who jointly announced 2,398 acquisitions and filed 125,440 new patent applications, in the period of our analysis. We argue a history of collaboration will allow the acquirer to more easily identify and absorb the target's knowledge, and show that the share of 'alliance-to-acquisition transitions', in the total set of the firm's acquisitions, increases the firm's inventive quantity. We also argue that a history of collaboration reduces the opportunity to encounter unknown and unexpected knowledge, which will affect both the type and quality of invention. We find support for the former, and show that the share of alliance-to-acquisition transitions increases the firms exploitative tendencies. In terms of the latter, we find a weak relationship between the share of transitions and overall patent quality, but find that the share of transitions does not affect the number of high quality breakthrough inventions. In so doing, we provide new insights, relevant to the acquisition literature, the literature on transitional governance, and the literature on organisational learning, and position alliance-to-acquisition transitions as a mechanism for altering the firm's technology production function

Market performance – liquidity or knowledge? Evidence from the market for corporate control

Market performance – liquidity or knowledge? Evidence from the market for corporate contro

Two's company, three's a crowd:The impact of corporate venture capital unit's investment partners on the corporate investor's innovation performance

This paper examines how the number, quality, and depth of the relationships, between a corporate venture capital (CVC) unit and the traditional venture capital (VC) that it coinvests with, affect the corporate investor's innovation performance. We find that there is an inverted U-shaped relationship between the number and the quality of the CVC unit's partners and the corporate investor's innovation performance. The depth of the relationship weakens the diminishing benefits of coinvesting with many partners. Jointly, our findings illustrate the danger of the 'more is always better' principle in terms of VC centrality and provide in-depth insights for corporate investors to organize innovation

The emergence and performance of the Chinese merger market and the impact of partner location

Chinese acquirers spent $38 million on mergers and acquisitions in 1990, and$666.1 billion on mergers and acquisitions in 2016. As the Chinese merger market has grown, so too has the literature on its performance. Little is known, however, with whom the Chinese can best do business. We aim to fill this gap. We suggest that because the liabilities of ‘distance’ ‘foreignness’ and ‘outsideness’ complicate acquisition performance, targets in countries and regions which add fewer of these liabilities will outperform those that add more. We test this using a sample of 19,766 large (>$10m) acquisitions (Jan 1990-Aug 2017), and a sub-sample of 1,542 acquisition for which we could calculate performance. We then plot the overseas expansion of Chinese acquirers, and compare the performance of Chinese acquisitions, within the Greater China region, within the Confucian cultural sphere, and between Asian and the West. In each case, we predict that increasing cultural distance decreases performance. Then, because the Continental European governance system is institutionally more familiar to the Chinese system than it is to the Anglo-Saxon system, we consider the Chinese experience in each of these two systems. Our results largely support our hypotheses, but we also point to the limits of the generalizability of existing literature in understanding the Chinese market

False Friends? On the Effect of Bureaucracy, Informality, Corruption and Conflict in Ukraine on Foreign and Domestic Acquisitions

Ukraine had had its ups and downs in recent years. It has, for example, dramatically improved its ease of doing business (EOBB), and it has made some progress reducing the relative size and influence of its shadow economy (Shadow). But, the Russian invasion of 2014 (Conflict) forced it to take a few developmental steps backwards. In this paper, we consider the effect of these factors, positive and negative, on the number of mergers and acquisitions, involving Ukrainian firms. We construct a sample of 4030 acquisitions in the period 1 January 2000-31 December 2020. Our results suggest that while the number of acquisitions by domestic firms increases in efficiency (+EOBB), transparency (- Shadow) and peace (- Conflict), the number of foreign acquisitions increases in bureaucracy (- EOBB), in informality (+Shadow), and unrest (+Conflict). From an academic perspective, our findings fit with some recent work, while providing new insights too. From a policy perspective, our findings that the number of foreign acquisitions is negatively affected by Ukraine's attempts to modernize and improve its economy and is positively affected by the ongoing conflict with Russia, makes us wonders what type of 'false friends' make such investments

Antibody mediated activation of natural killer cells in malaria exposed pregnant women

Immune effector responses against Plasmodium falciparum include antibody-mediated activation of innate immune cells, which can induce Fc effector functions, including antibody-dependent cellular cytotoxicity, and the secretion of cytokines and chemokines. These effector functions are regulated by the composition of immunoglobulin G (IgG) Fc N-linked glycans. However, a role for antibody-mediated natural killer (NK) cells activation or Fc N-linked glycans in pregnant women with malaria has not yet been established. Herein, we studied the capacity of IgG antibodies from pregnant women, with placental malaria or non-placental malaria, to induce NK cell activation in response to placental malaria-associated antigens DBL2 and DBL3. Antibody-mediated NK cell activation was observed in pregnant women with malaria, but no differences were associated with susceptibility to placental malaria. Elevated anti-inflammatory glycosylation patterns of IgG antibodies were observed in pregnant women with or without malaria infection, which were not seen in healthy non-pregnant controls. This suggests that pregnancy-associated anti-inflammatory Fc N-linked glycans may dampen the antibody-mediated activation of NK cells in pregnant women with malaria infection. Overall, although anti-inflammatory glycans and antibody-dependent NK cell activation were detected in pregnant women with malaria, a definitive role for these antibody features in protecting against placental malaria remains to be proven