Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96232
Authors: 
Hunt, Richard A.
Fund, Bret
Year of Publication: 
2012
Citation: 
[Journal:] The Journal of Entrepreneurial Finance (JEF) [ISSN:] 1551-9570 [Volume:] 16 [Year:] 2012 [Issue:] 1 [Pages:] 29-56
Abstract: 
This paper presents a long overdue reassessment of entrepreneurship through acquisition (ETA). Traditionally considered simply a niche occurrence of small company leveraged buyouts (LBO), ETA is actually a meaningful contributor to a nation's entrepreneurial capacity and business revitalization. Scholarly understanding of ETA has been severely limited by three factors: the paucity of data related to entrepreneurial acquisitions, the tendency to equate entrepreneurship primarily with new venture creation, and the reliance upon explanatory models for buyouts that are grounded in narrowly conceived notions of 1980s-era, large-scale, hyper-leveraged LBOs. Prior efforts to conceptualize all buyouts based on the large LBO model and through the lens of agency theory have severely restricted the ability of scholars to look past the buyout model motivated by financial reengineering gains to see instead the entrepreneurial aims and outcomes often associated with buyouts, particularly ETA. In order to situate ETA more fruitfully in the domain of entrepreneurship finance, we take issue with the conventional agency theory framing and offer instead an explanatory model for ETA involving entrepreneurial intent and novel financing. To overcome the data scarcity problems and to bring the characteristics of ETA into sharper relief, we present testable propositions side-by-side with data from search funds, a specific ETA investment vehicle that substantively replicates the entrepreneurial intents and outcomes of ETA. By examining the theoretical streams of LBO and entrepreneurship finance in practical context of search funds, we build a more coherent conceptualization of ETA.
Subjects: 
entrepreneurship through acquisition
entrepreneurial finance
search funds
buyouts
buyins
Merger
Acquisition
M&A
ETA
LBO
JEL: 
G34
M13
Document Type: 
Article

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.