Can Entrepreneurs Who Experienced Business Closure Bring Their New Start-Up to a Successful M&A?

Shai Harel, Eliran Solodoha () and Stav Rosenzweig
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Shai Harel: Entrepreneurship Department, Coller School of Management, Tel Aviv University, Tel Aviv POB 6997801, Israel
Eliran Solodoha: The Department of Management, The Guilford Glazer Faculty of Business and Management, Ben-Gurion University of the Negev, POB 653, Beer Sheva 8410501, Israel
Stav Rosenzweig: The Department of Management, The Guilford Glazer Faculty of Business and Management, Ben-Gurion University of the Negev, POB 653, Beer Sheva 8410501, Israel

JRFM, 2022, vol. 15, issue 9, 1-17

Abstract: Numerous technology start-ups end up shutting down their operations. The present study aims to answer the following research questions: can entrepreneurs who closed their previous ventures bring their new venture to a successful exit through M&A and to what extent does this positive outcome correspond to whether investors funded their start-up? We examine 9723 technology start-ups established by 19,458 entrepreneurs. About half of the start-ups were funded, and 3463 of them had entrepreneurs with closure or with M&A experience. We find that entrepreneurs with closure experience are negatively associated with the probability of M&A as a main effect, in line with the theory that indicates imprinting. Nevertheless, entrepreneurs with closure experience are positively associated with the probability of M&A when their co-founders have M&A experience. We suggest that entrepreneurs with closure experience can compensate for their lack of M&A experience by learning from their peers who possess this experience. We discuss implications for theory, investors, and entrepreneurs.

Keywords: entrepreneurs; closure experience; M&A; funding (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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