Mergers and acquisitions (M&As) of private target firms is a common
phenomenon and being acquired is the desired outcome for some private firms, as it is the
path to wealth creation for these firm’s owners and investors. However, this M&A type
has received limited attention in the literature, especially from the perspective of the
target firm. Furthermore, neither a theoretical model to explain the phenomenon where
the goal of the target firm is to be acquired in M&A, nor an indicator to gauge wealth
creation for such firms were identified in the review of the literature.
This paper established that, because being acquired in a M&A may be the goal,
the wealth generated from the M&A is the outcome or performance indicator for such
firms. The outcomes of M&As depend, among other factors, on the acquiring firm’s
perception of the target firm’s value. Thus, this paper coined the term ‘private firm’s
attractiveness as an acquisition target’, and built on the resource based view of the firm and signaling theory to identify factors that influence a private firm’s
attractiveness to acquirers. Furthermore, private firm’s attractiveness as an acquisition
target was used as the bridge between the acquiring firm perspective and target firm
perspective in a M&A.
The resource-based view of the firm and the signaling theory were used jointly in
building the theoretical framework for hypotheses development. Hypotheses were tested
using a sample of 222 acquisitions of US private target firms by US public acquiring
firms. Hierarchical regression with inverse mills ratio, as well as two-step Heckman
model were used to address the potential selection hazard.
Results provided strong support for most hypotheses, and showed that investor
involvement, target firm’s industry innovativeness, and target firm’s emphasis on growth
in human capital were positively related to the private firm’s attractiveness as an
acquisition target. Furthermore, the effects of emphasis on growth in human capital were
stronger when the target firm’s growth in revenue was lower and when the target firm
operated in a more innovative industry. The effects of emphasis on growth in revenue
were stronger when the target firm operated in a less innovative industry. / Includes bibliography. / Dissertation (Ph.D.)--Florida Atlantic University, 2018. / FAU Electronic Theses and Dissertations Collection
| Identifer | oai:union.ndltd.org:fau.edu/oai:fau.digital.flvc.org:fau_40920 |
| Contributors | Faifman, Leon (author), Ellis, Kimberly (Thesis advisor), Golden, Peggy (Thesis advisor), Florida Atlantic University (Degree grantor), College of Business, Department of Management |
| Publisher | Florida Atlantic University |
| Source Sets | Florida Atlantic University |
| Language | English |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation, Text |
| Format | 148 p., application/pdf |
| Rights | Copyright © is held by the author with permission granted to Florida Atlantic University to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder., http://rightsstatements.org/vocab/InC/1.0/ |
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