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Pre-acquisition profile of privately held companies involved in takeovers: an empirical study

Author

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  • Hubert Ooghe
  • Jan Camerlynck

    (Vlerick Leuven Gent Management School)

Abstract

This study addresses the pre-acquisition financial characteristics of privately held acquiring and acquired companies involved in 143 Belgian takeovers between 1992 and 1994. Specifically, the research examines the profitability, liquidity, financial structure, added value and failure risk using statistical analysis of industry-adjusted 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 or a financial fit between acquirers and their targets.

Suggested Citation

  • Hubert Ooghe & Jan Camerlynck, 2002. "Pre-acquisition profile of privately held companies involved in takeovers: an empirical study," Vlerick Leuven Gent Management School Working Paper Series 2001-10, Vlerick Leuven Gent Management School.
    • Handle: RePEc:vlg:vlgwps:2001-10
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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. Natalia Isachenkova & Melvyn Weeks, 2009. "Acquisition, Involvency and Managers in UK Small Companies," Working Papers wp390, Centre for Business Research, University of Cambridge.
    3. Hubert Ooghe & Tine De Langhe & Jan Camerlynck, 2006. "Profile of multiple versus single acquirers and their targets: a research note," Applied Economics, Taylor & Francis Journals, vol. 38(7), pages 725-733.
    4. Eda ORUÇ ERDOĞAN & Murat ERDOĞAN, 2014. "Effect of Acquisition Activity on the Financial Indicators of Companies: An Application in BIST," International Journal of Business and Social Research, LAR Center Press, vol. 4(7), pages 17-22, July.
    5. Eda ORUÇ ERDOĞAN & Murat ERDOĞAN, 2014. "Effect of Acquisition Activity on the Financial Indicators of Companies: An Application in BIST," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 4(7), pages 17-22, July.
    6. Annette B. Poulsen & Mike Stegemoller, 2008. "Moving from Private to Public Ownership: Selling Out to Public Firms versus Initial Public Offerings," Financial Management, Financial Management Association International, vol. 37(1), pages 81-101, March.
    7. 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.
    8. 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.
    9. Yassine Bakkar & Susanne Durst & Wolfgang Gerstlberger, 2021. "The Impact of Institutional Dimensions on Entrepreneurial Intentions of Students—International Evidence," JRFM, MDPI, vol. 14(4), pages 1-23, April.
    10. 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.
    11. 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.
    12. Fateh Saci & Boualem Aliouat, 2014. "Do strategic partnerships create value? "The empirical case of SBF 250 firms"," Post-Print halshs-01068783, HAL.
    13. 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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