Acquisition, Insolvency and Managers in UK Small Companies

This paper investigates the determinants of involuntary insolvency and acquisition in UK small and medium-sized companies. Using a competing risks model and data from the survey database of the ESRC CBR at the University of Cambridge, we draw specific attention to the impact of managerial characteristics. The explanatory power of financial variables, firm size, and firm age, highlighted by previous studies, is confirmed. In addition, the results indicate that .rms run by entrepreneurial managers with higher human capital and intentions to pursue a strategy of growth have greater survival prospects and are less likely to be forced into insolvency or become acquired.