The M&A exit outcomes of new, young firms

The legal structure of ventures and exit routes: A study of single-founder start-ups in the United States

“…This finding is in line with other empirical studies that addressed the influence of the legal structure of a venture on the likelihood of an exit (Brüderl and Schüssler, 1990;Harhoff et al, 1998). In addition, this study's finding that legal structure influences the routes of venture exits is in line with the entrepreneurial exit literature that has found that the drivers of exit routes differ across ventures with different legal forms (Coleman et al, 2010;Cotei and Farhat, 2018). The finding of this study, thus, extends the legal status-venture exit literature by confirming that divergent exit routes are influenced by the legal structure which connotes the growth aspirations of the founder.…”

“…Based on institutional theory, which contends that rules and regulations, societal norms, and culture influence the survival and legitimacy of an organization (Bruton et al, 2010; North, 1990), prior studies have examined the contextual drivers of entrepreneurial exit that allows entrepreneurs to harvest the value of their ventures (DeTienne, 2010; Wennberg and DeTienne, 2014; Wennberg et al, 2010). Among them, one stream of research has examined how entrepreneurial exit is associated with the legal structure of ventures, which is an important contextual driver of venture exit (Cotei and Farhat, 2018; Harhoff et al, 1998; Turk and Shelton, 2006). Although these studies have increased our understanding of the legal forms of ventures that exited their businesses, they mainly focused on either binary exit outcomes (i.e.…”

Strategies to Grow and Expand a Nonprofit Business

“…Additionally, that leaders should be attentive to employees' emotions to (a) increase performance; (b) reduce conflict; (c) reduce performance issues; and (d) increase satisfaction, participation, retention, efficiency, compliance, and commitment (Ansah et al, 2018). Cotei and Farhat (2018) conducted a study to consider the merger and acquisition (M&A) exit behavior of new, young businesses and how this behavior is shaped by their innovative capabilities and employment growth. The authors found that the form of organization is an important determinant of startup growth and that new and young firms with the corporation form of organization and possessions shared startup characteristics as more assets, more employees, high innovation ability, and more business debt had higher growth potential in addition to different acquisition outcomes due to innovation and employment.…”

Innovation and job creation in (high-growth) new firms

“…Finally, recent empirical studies have underscored the importance of distinguishing between incorporated versus unincorporated new firms since the former are generally more growth oriented and show higher probabilities of achieving entrepreneurial success (Levine and Rubinstein, 2017), making the non-employer to employer transition (Fairlie and Miranda, 2017), experiencing extreme growth outcomes (Guzman and Stern, 2016), or becoming targets of mergers and acquisitions (Cotei and Farhat, 2017). Based on this consideration, we include a set of fixed effects controlling for the legal form declared by new firms at the time of their founding.…”