| This dissertation examines acquisition decision-making in entrepreneurial ventures from the perspective of the potential acquiree. Prior research on acquisition decision-making has focused on the perspective of the buying firm and has examined established, publicly-traded companies. This dissertation used an inductive, grounded theory-building approach based on case studies of twelve entrepreneurial ventures in three industry sectors. I develop a framework describing when and why company leaders decide to sell their firms, and to whom they decide to sell. Company leaders' overall level of interest in selling is dynamic, and is greater when the company is facing difficult expansion hurdles such as a CEO search. At other times, company leaders may refuse to seriously consider acquisition and may take actions that reduce the interest of potential buyers. Company leaders' level of interest in selling is also greater when the CEO has strong personal motivation for sale, such as a past failure or investment by family members. Managers often have such personal motives, and persuade their investors to support a sale, rather than the reverse. When choosing among potential buyers, selling firm leaders do not solely consider price. Selling firm leaders are more likely to choose buyers offering combination potential, consisting of both similarities and complementarities between the two companies. Interest in a specific buyer is also greater if selling firm leaders perceive that interpersonal fit exists between the firms. However, interpersonal fit is often judged based on very limited information. Overall, this framework contributes to the literature on mergers and acquisitions, agency theory, and the social embeddedness of economic behavior. |
