Exploring the Acquisitive Growth Strategies of SMEs: The Case of Life Science European Start-ups

Acquisitions represent a prominent channel of firms’ external growth. While the empirical evidence is mostly based on acquisitions by large incumbents, the acquisitive growth of Small and Medium Enterprises (SMEs) is largely overlooked. Small firms have such distinctive characteristics that are likely to shape acquisitive growth and its outcomes in a different way with respect to what has been already theorized for acquisitions involving large firms. Using comprehensive data on acquisitions deals and firms’ liquidity events, we explore the acquisitive strategies of SMEs in the life science industry which experience a high rate of acquisitions and participation of highly innovative small firms. In particular, we investigate which acquisitive strategies lead to SMEs successful scaling by examining the type of acquisitions (e.g., international vs. domestic, concentrated vs. diversifying) and its prospective outcome for acquiring SMEs in terms of profitable growth. This study extends the literature on SMEs’ growth which has mostly focused on organic growth and has remained rather silent on acquisitive growth.