Who is Entrepreneurial? Evidence from Late Bloomer Firms with M&A strategies

The literature considers firms seeking finance through an initial public offering (IPO) as entrepreneurial. But are they? We hypothesize that firms in the latter stage of industry life-cycle, or late bloomer firms as less innovative, proactive, and risk-taking, signal entrepreneurial orientation with competitively aggressive M&A strategies. They strategically time an IPO to mitigate adverse selection. Analyzing U.S. data, we find that late bloomer firms are 54% more likely to engage in M&As four years following an IPO and acquire 42% faster following the IPO. This M&A pattern is more pronounced at the time of, and among firms with, capital constraints