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The value of financial freedom and ownership in opportunities of entrepreneurial harvest

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  • Joao C. Neves

Abstract

Mergers and acquisitions can play a key role in consolidation of highly fragmented industries and in a company's on-going growth. From the entrepreneur's point of view, merging with a larger company or being acquired makes perfect sense when he finds it is the appropriate timing for capturing the value that has been created through the venture. This paper argues that the financial freedom of the entrepreneur and the non-existence of agency problems between managers and owners which reduce the myopic short times bias of managers are sources of value not reflected in the financial statements. The evidence is presented using the case study methodology in 12 opportunities of entrepreneurial harvest. Consequently, the study calls the attention of users of financial information to the dangers of traditional financial analysis and valuation methods without a deep understanding of the economic grounds of the entrepreneurial firm analysed.

Suggested Citation

  • Joao C. Neves, 2005. "The value of financial freedom and ownership in opportunities of entrepreneurial harvest," International Journal of Entrepreneurship and Innovation Management, Inderscience Enterprises Ltd, vol. 5(5/6), pages 469-482.
    • Handle: RePEc:ids:ijeima:v:5:y:2005:i:5/6:p:469-482
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