Success Factors of Start-Up Acquisitions: Evidence from Israel

Abstract

Objective:This article aims to explore the factors behind successful M&A of start-up companies.

Research Design & Methods: The objectives of this qualitative study are pursued in the context of acquired high-tech start-ups in Israel. The study employed semi-structured interviews. The practical model for analysing the transcribed interview responses was based on Shkedi’s (2003) method, drawing also from the grounded theory tradition in the process of coding and interpreting data categories.

Findings: The results of this research highlight the communication climate (comprising factors such as openness, trust, supportiveness and interest of top managers in the employee’s well-being) as a vital behavioural mechanism influencing post-acquisition performance. Also, we found that effective knowledge transfer to the acquired company is one of the essential determinants of success.company is one of the essential determinants of success.

Implications & Recommendations: M&A require a clear business plan, that which is based on realistic needs. A major fault in many start-ups is focus on technology rather than on strategy. Many start-ups are established and staffed by engineers and scientists who often believe, erroneously, that a good product will sell.

Contribution & Value Added: In extant research, most attention has been paid to the acquiring company perspective on success. In contrast, this study focuses on the seller’s perspective and contribution to M&A success, instead of on the buyer’s perspective.

Keywords

start-up acquisitions, trust, commitment, resistance to change, suc-cess factors, firm performance, Israel

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