From start-up to acquisition: Implications of financial investment trends for small- to medium-sized high-tech enterprises

Authors

  • Kristin C Irwin University of Alabama
  • Collin M Gilstrap University of Toledo
  • Paul L Drnevich University of Alabama
  • Chance M Tudor University of Alabama

Abstract

The high-technology (high-tech) industry is a dynamic environment defined by both frequent changes in composition and a concentration of market power through consolidation. Operating as a new or small venture within this environment poses many complex challenges, especially when considering the financial resources needed to be successful. In their efforts to obtain financial resources, entrepreneurs often overlook how the choice and pattern of investment funding to maintain a growth path can later affect a successful entrepreneurial exit. Exit via acquisition for small- to medium-sized technology enterprises (SMTEs) is a strong area of interest given firms in the U.S. high-tech industry experience the fastest growth rates and have been the target of over $400 billion in deal volume and 20% of all merger and acquisition (M&A) transactions in the last twenty years. Much of this M&A activity is conducted by five prominent firms, Alphabet, Amazon, Apple, Facebook, Microsoft, commonly referred to as the Fearsome Five or the “FANGS”. However, as there has been only limited research examining this unique M&A context, in this study we explore the investment funding factors influencing exit via acquisition by the Fearsome Five. We highlight questions and potential concerns for SMTEs given the trends in financial investments and increasing market power.

Downloads

Published

2019-06-27

Issue

Vol. 29 No. 2 (2019)

Section

Articles

License

The Journal of Small Business Strategy (the “Publisher”) and the Author(s) agree as follows:
 
1.Author(s) hereby grant to Publisher all right, title, and interest in and to the Work, including copyright to all means of expression by any method now known or hereafter developed, including electronic format. If Publisher does not publish the Work within two (2) years of the Effective Date, copyright shall revert back to the Author. Publisher agrees to always credit Author(s) as the author(s) of the Work.
 
2.Publisher hereby grants Author a royalty-free, limited license for the following purposes, provided the Work is always identified as having first been published by Publisher.
    •The right to make and distribute copies of all or part of the Work for use in teaching;
    •The right to use all or part of the material contained in the Work in a book by the Author(s), or in a collection of the Author(s)’s work;
    •The right to use and distribute the Work internally at the Author(s)’s place of employment, and for promotion and any other non-commercial purposes;
    •The right to use figures and tables from the Work for any purpose;
    •The right to make presentations of material from the Work;
    •The right to use and distribute the Work on the Author(s)’s Web site and on the Author(s)’s university’s institute repository;
Such license shall be effective when the Work is first published in the Journal of Small Business Strategy.
 
3.The Author(s) represents and warrants that the Work: (a) is the Author(s)’s original work and that Author(s) has full power to enter into this agreement; (b) does not infringe the copyright or property right of another; (c) contains no materials which is obscene, libelous, defamatory or violates another’s civil right, right of privacy, or is otherwise unlawful; and (d) has not been previously published, in whole or in part. Author(s) shall indemnify and hold Publisher harmless against loss or expenses arising from breach of any such warranties.

How to Cite

From start-up to acquisition: Implications of financial investment trends for small- to medium-sized high-tech enterprises. (2019). Journal of Small Business Strategy (archive Only), 29(2), 22-43. https://libjournals.mtsu.edu/index.php/jsbs/article/view/1387