Existing research shows that bidder default risk increases following acquisitions due to a rise in post-acquisition leverage and managerial risk-taking actions offsetting the potential for asset diversification. This study examines whether the risk effects of acquiring distressed targets are fundamentally different and investigates possible explanations for any dissimilarities. Bidders often acquire relatively smaller distressed targets in domestic and related industries and have a higher initial target stake and more financial flexibility, thereby minimizing risk exposure. Controlling for several characteristics of bidder investment behaviour in both types of deals, however, we find that the increase in bidder default risk is substantially larger when acquiring distressed firms.

Although a significant body of research has investigated the independent effects of distinct types of slack resources, current theoretical and empirical work does not sufficiently clarify how bundles of slack resources affect firm outcomes. Drawing on the resource constraints literature and the slack literature, we investigate how distinct bundles of financial and human resource slack influence firm performance and survival. Using a sample of 4715 European information and communication technology firms, we show that neither parallel resource abundance (having slack in financial and human resources) nor parallel resource constraints (lacking slack in financial and human resources) are optimal for firm performance and survival. However, firms with selective constraints that combine slack in financial resources with constraints in human resources exhibit superior performance without decreased survival prospects. Taken together, this study extends current research by providing a more nuanced view of the relationships between slack resources, firm performance, and firm survival.

This paper examines how angel investors' human capital affects the valuation of their portfolio companies, based on the pre-money valuation of 123 investment rounds in 58 Belgian companies. We argue that angel investors with higher levels of human capital will perceive a higher value-creating potential in entrepreneurial opportunities through their ability to see more value-creating options, a higher value-adding potential post-investment and an enhanced legitimacy provided to the venture. Economic theories suggest they appropriate these rents through lower valuations, while stewardship theory suggests they share value creation with entrepreneurs. Consistent with stewardship theory, we show angel investors negotiate higher valuations when they have higher levels of human capital, more specifically if they studied longer, have a business degree, more entrepreneurial experience or previous professional law experience. As such, our results contrast with the behaviour of venture capital investors who negotiate lower valuations when they have more experience.

This paper empirically investigates the antecedents of growth through mergers and acquisitions (M&As) in a typical continental European country, Belgium. The article reports on a study using data on 484 private and listed bidders engaging in 990 M&As during 1997–2007, and matches this sample with companies that did not pursue any external growth. By analyzing firm characteristics, industry, and aggregate financial market variables, the study can also discern the motives that are important in the decision to acquire. The results show that neither the firm's cash position nor its cash-generating abilities influence its choice to grow externally. Yet, intangible assets affect the M&A decision positively, whereas ownership concentration and bank loans have a negative effect. In industries where incumbents are operating at a lower scale and in more highly concentrated industries, the odds of firms participating in M&As are larger. Industry deregulation, industry growth, and financial market conditions have no influence. These findings are largely comparable across listed and private firms. Yet, the data do reveal that the operating scale of industry incumbents and industry concentration matter only in horizontal and domestic takeover decisions.

and discusses the implications. The resulting synthesis provides new insights for