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

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  • Jan Camerlynck
  • Hubert Ooghe

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  • Tine Langhe

Abstract

This study addresses the pre-acquisition financial characteristics of privately held, rather small acquiring and acquired companies involved in 143 Belgian take-overs between 1992 and 1994. Specifically, the research examines the profitability, liquidity, financial structure, added value and failure risk using statistical analysis of industryadjusted 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 within, but a financial fit between acquirers and their targets. Copyright Springer 2005

Suggested Citation

  • Jan Camerlynck & Hubert Ooghe & Tine Langhe, 2005. "Pre-Acquisition Profile of Privately Held Companies Involved in Take-Overs: An Empirical Study," Small Business Economics, Springer, vol. 24(2), pages 169-186, March.
  • Handle: RePEc:kap:sbusec:v:24:y:2005:i:2:p:169-186
    DOI: 10.1007/s11187-003-3807-2
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    Cited by:

    1. Stefano CLO & Chiara F. DEL BO & Matteo FERRARIS & Massimo FLORIO & Daniela VANDONE & Carlo FIORIO, 2015. "Public Enterprises In The Market For Corporate Control: Recent Worldwide Evidence," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 86(4), pages 559-583, December.
    2. Stefano Clò & Matteo Ferraris & Massimo Florio, 2015. "Public Enterprises in a Global Perspective in the Last Decade," L'industria, Società editrice il Mulino, issue 1, pages 111-138.
    3. Natalia Isachenkova & Melvyn Weeks, 2009. "Acquisition, Involvency and Managers in UK Small Companies," Working Papers wp390, Centre for Business Research, University of Cambridge.
    4. Stefano CLÒ & Chiara F. DEL BÒ & Matteo FERRARIS & Carlo FIORIO & Massimo FLORIO & Daniela VANDONE, 2014. "Publicization versus Privatization: Recent worldwide evidence," CIRIEC Working Papers 1403, CIRIEC - Université de Liège.
    5. Isachenkova, N. & Weeks, M., 2008. "Acquisition, Insolvency and Managers in UK Small Companies," Cambridge Working Papers in Economics 0838, Faculty of Economics, University of Cambridge.
    6. Dionysios Polemis & Dimitrios Gounopoulos, 2012. "Prediction of distress and identification of potential M&As targets in UK," Managerial Finance, Emerald Group Publishing, vol. 38(11), pages 1085-1104, September.
    7. Fateh Saci & Boualem Aliouat, 2014. "La création de valeur boursière des partenariats stratégiques et des fusions-acquisitions " Cas des sociétés du SBF 250 "," Working Papers halshs-01068790, HAL.
    8. Fateh Saci & Boualem Aliouat, 2014. "Do strategic partnerships create value? "The empirical case of SBF 250 firms"," Post-Print halshs-01068783, HAL.
    9. Hubert Ooghe & Elisabeth Laere & Tine Langhe, 2006. "Are Acquisitions Worthwhile? An Empirical Study of the Post-Acquisition Performance of Privately Held Belgian Companies," Small Business Economics, Springer, vol. 27(2), pages 223-243, October.

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