A constitutive view on entrepreneurship through acquisition : Towards a conceptual framework

Abstract

The purpose of the thesis is to analyze the phenomenon of “Entrepreneurship through Acquisition” or ETA. An ETA transaction as opposed to a buyout is defined here as a smaller and more entrepreneurial version of the classical leveraged management buy-in. Previous research on entrepreneurship and transitions into entrepreneurship, have always been predominantly focused on start-up entrepreneurship. ETA is a relatively widespread phenomenon and an alternative way to become an entrepreneur. The main focus here lays onthe study of the middle-aged senior (nascent) ETA entrepreneur. Besides making a typology of the nascent and actual ETA entrepreneur, the influence of different forms of entrepreneurial capital and the likelihood of ETA entrepreneurial entry has been analyzed in the first part of the thesis. While work and/or managerial experience, prior start-up or shareholdings and parental background do not have a significant impact on the likelihood of becoming an ETA entrepreneur, self employment, the higher the amount an ETA entrepreneur is prepared to invest and a certain age do increase the odds of acquiring a company. A second part of the thesis analyzes the investment criteria of an ETA manager, while comparing them between nascent and actual ETA managers and comparing them with the IC of other types o similar investors like private equity (LBO and MBI), venture capital, business angels and search funds. The latter and the MBI investors being the most similar. “Potential market growth”, “professionalization and improvement potential”, as well as “stable demand and recurring customers” were found to be the three most important investment criteria, showing little differences, except for “location” and “technology”, between the nascent and actual ETA entrepreneur. Three criteria, i.e. “potential market growth”, “technology” and “sales turnover” have the strongest significant influence on whether a company finally gets acquired or not. A third part of the thesis measures the social identities of the (nascent) ETA entrepreneurs and their impact on the nascent-active gap. Using the framework of Fauchart & Gruberfor founder identities measured by the scale developed by Sieger et al., the Darwinian founder social identity is the predominant social identity of the (nascent) ETA entrepreneur. On the other hand, no significant relationships between one of the social identities and the likelihood to actually become an active ETA entrepreneur in a given time period compared to when they do not have this identity, were found.