Firm valuation effects of high-tech M&A: A comparison of new ventures and established firms

I examine whether the unique attributes of new ventures cause these firms to experience different M&A outcomes vis-à-vis established firms. I also wish to test how the differences between these two classes of buyers play out in acquisitions of privately-held and newly-incorporated targets. Drawing from a sample of high-technology acquisitions, the results show that new ventures experience lower average performance in general, as well as when the target is itself a new venture. Yet, they outperform established firms when the target is a privately-held entity. The findings demonstrate that the challenges and opportunities of firms shift through the first few years of their existence, directly affecting the outcomes of their M&A activity.