Elizabeth Garnsey, University of Cambridge

Vivian Mohr, University of Cambridge

Acquisition is a means by which founders and investors can realise the value of their
enterprises and as such is part of the life cycle of many technology enterprises.
Acquisition of local firms attracts external capital to the area and results in postacquisition
spin-off by former employees, but it takes another business generation for
any spin-off firms to grow to the size of their parent. The innovative potential of
young firms that are subsumed within a corporate entity may not be realised. This
paper quantifies the available data on patterns of acquisition and their impact in the
Cambridge technology cluster. Among all acquired firms over the period 1988-2008,
80% were approaching mid-size (50 employees). Firms with good prospects/ a growth
record, spin-off firms and firms funded by venture capital were particularly likely to
be acquired, particularly as opportunities for IPO diminished in the economic
downturn.

Keywords: Cambridge cluster, Cambridge Phenomenon, firm acquisitions