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Acquiring startups in the energy sector: a study of firm value and environmental policy

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  • Ohsung Kwon
  • Sangmin Lim
  • Duk Hee Lee

Abstract

Mergers and acquisitions are important activities for the growth of firms. In the energy sector, acquiring firms can obtain eco‐friendly technology and premiums, as well as tangible assets, through the acquisition of energy firms. Among many energy firms, an acquired startup is more effective since the acquisition price is relatively inexpensive and the acquiring firm is also exposed to entrepreneurial culture. In this study, to test the acquisition effect, datasets from Worldscope and CrunchBase are used. It is observed that, despite the advantages of an acquisition, the effect of a startup acquisition is negative. However, firms in environmentally sensitive industries benefit from such acquisition activity. The acquisition price of energy startups is overestimated due to increasing demand for acquisitions. On the other hand, the eco‐premiums also help dirty firms make a profit.

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  • Ohsung Kwon & Sangmin Lim & Duk Hee Lee, 2018. "Acquiring startups in the energy sector: a study of firm value and environmental policy," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1376-1384, December.
    • Handle: RePEc:bla:bstrat:v:27:y:2018:i:8:p:1376-1384
    DOI: 10.1002/bse.2187
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    2. Ioannis Tampakoudis & Evgenia Anagnostopoulou, 2020. "The effect of mergers and acquisitions on environmental, social and governance performance and market value: Evidence from EU acquirers," Business Strategy and the Environment, Wiley Blackwell, vol. 29(5), pages 1865-1875, July.
    3. Jerzy Niemczyk & Aleksandra Sus & Kamil Borowski & Bartosz Jasiński & Katarzyna Jasińska, 2022. "The Dominant Motives of Mergers and Acquisitions in the Energy Sector in Western Europe from the Perspective of Green Economy," Energies, MDPI, vol. 15(3), pages 1-17, January.
    4. Fikru, Mahelet G. & Gautier, Luis, 2020. "Are big mergers welfare enhancing when there is environmental externality?," Energy Economics, Elsevier, vol. 87(C).
    5. Khanindra Ch. Das, 2023. "What Affects Startup Acquisition in Emerging Economy? Evidence from India," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 22(2), pages 111-134, June.
    6. Ohsung Kwon, 2020. "A study on how startups approach sustainable development through intellectual property," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(4), pages 613-625, July.
    7. Michał Bańka & Mariusz Salwin & Maria Kukurba & Szymon Rychlik & Joanna Kłos & Monika Sychowicz, 2022. "Start-Up Accelerators and Their Impact on Sustainability: Literature Analysis and Case Studies from the Energy Sector," Sustainability, MDPI, vol. 14(20), pages 1-30, October.
    8. Barros, Victor & Verga Matos, Pedro & Miranda Sarmento, Joaquim & Rino Vieira, Pedro, 2022. "M&A activity as a driver for better ESG performance," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    9. Barbieri, Elisa & Huang, Manli & Pi, Shenglei & Pollio, Chiara & Rubini, Lauretta, 2021. "Investigating the linkages between industrial policies and M&A dynamics: Evidence from China," China Economic Review, Elsevier, vol. 69(C).
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