The Avoidance of growing pains: Success factors for a healthy organizational development of young SME's going public.

Table of Contents

1 Introduction

1.1 Background and Problem Statement

1.2 State of Research

1.3 Aims and Objectives

1.4 Scope of research and limitations

2 Literature Review

2.1 The Concept of Growth

2.1.1 Introduction

2.1.2 Organizational growth

2.1.3 Organizational Life Cycle

2.1.4 Healthy growth vs. unhealthy growth

2.2 The Concept of the “New Institutional Economics”

2.2.1 Introduction

2.2.2 New Institutional Economics

2.2.2.1 Property-Rights

2.2.2.2 Principal Agent Theory

2.3 The Concept of Value-orientation

2.3.1 Introduction

2.3.2 Value-based management

2.3.2.1 Financial value-drivers

2.3.2.2 Operational value-drivers

2.3.2.3 Value-based Communication as Value-driver

2.4 Summary

3 Research Framework

3.1 Conceptualization of findings

3.2 Development of research framework

3.2.1 Conducting the framework

3.2.1.1 Organizational maturity

3.2.1.2 Transparency

3.2.1.3 Management quality

4 Research Method and Empirical data

4.1 Research Methodology

4.1.1 Archival data analysis

4.1.2 Sample

4.1.3 Data Collection – Secondary data

4.2 Empirical Data

4.3 Presentation of the sample

4.4 Analysis of the IPO-Prospectus

4.5 Archival Analysis

4.5.1 Performers

4.5.1.1 SHW AG

4.5.1.2 EVONIK INDUSTRIES AG

4.5.2 Non-Performers

4.5.2.1 CONERGY AG

4.5.2.2 INTICA SYSTEMS AG

4.5.2.3 ASIAN BAMBOO AG

4.5.2.4 EPIGENOMICS AG

4.5.2.5 WILEX AG

4.5.2.6 ESTAVIS AG

4.6 Benchmark of performers vs. non-performers

4.7 Summary of empirical data

5 Analyses

5.1 Comparison of transparency

5.1.1 Performers

5.1.2 Non-Performers

5.2 Comparison of organizational maturity

5.2.1 Performers

5.2.2 Non-Performers

5.3 Comparison of management quality

5.3.1 Performers

5.3.2 Non-Performers

5.4 Summary of Analyses

6 Conclusions

6.1 Findings and Conclusion

6.2 Recommendations

6.3 Implications

6.4 Further Research

6.5 Concluding Comment

Research Objectives and Topics

This master thesis investigates success factors for young Small and Mid-sized Enterprises (SMEs) during their initial public offering (IPO) to facilitate healthy organizational development and mitigate "growing pains." The central research question explores how internal management systems and organizational maturity influence post-IPO performance and whether specific value-based management strategies can prevent the sustained value destruction often observed in young companies after going public.

• Analysis of organizational growth models and the life cycle of young SMEs.
• Application of New Institutional Economics to understand the agency problem between issuers and investors.
• Examination of Value-Based Management (VBM) and its key financial and operational drivers.
• Empirical case study analysis of selected companies listed on the Frankfurt Stock Exchange to compare "Performers" and "Non-Performers."

Excerpt from the Book

Summary of Chapters

1 Introduction: This chapter introduces the problem of young SMEs facing high risks and the need for capital through IPOs, establishing the research hypothesis regarding management quality and growing pains.

2 Literature Review: This section covers theoretical concepts including organizational life cycles, New Institutional Economics (Property Rights and Principal-Agent Theory), and Value-based Management as tools for sustainable growth.

3 Research Framework: This chapter conceptualizes findings from the literature to model success factors, identifying organizational maturity, transparency, and management quality as critical forces.

4 Research Method and Empirical data: The methodology describes the archival data analysis of 24 companies, splitting them into "Performers" and "Non-Performers" based on their IPO performance and use of value-oriented metrics.

5 Analyses: This section compares the transparency, organizational maturity, and management quality of the case study companies to validate the research framework.

6 Conclusions: The final chapter summarizes the findings, confirming that value-oriented management and strategic infrastructure are essential for avoiding post-IPO growing pains, while acknowledging the limitations of the small sample size.

Keywords

SME, IPO, Growth Pains, Organizational Life Cycle, New Institutional Economics, Principal-Agent Theory, Value-Based Management, EVA, ROCE, Corporate Governance, Financial Controlling, Shareholder Value, Organizational Maturity, Transparency, Capital Markets.

Frequently Asked Questions

What is the core focus of this master thesis?

The thesis focuses on identifying critical success factors for young SMEs aiming for a successful IPO while avoiding the common phenomenon of "growing pains" at the post-IPO stage.

What are the central thematic fields covered?

The work integrates organizational development theories, the concept of New Institutional Economics, and Value-Based Management principles to evaluate corporate performance.

What is the primary research question?

The primary research question asks which factors contribute to healthy organizational development for young SMEs and to what extent management systems influence success after an IPO.

Which scientific methodology is utilized?

The study utilizes a combination of qualitative and quantitative archival data analysis, examining IPO prospectuses, annual reports, and financial market data of 24 companies.

What is addressed in the main part of the thesis?

The main part analyzes the differences between high-performing companies (using value-based metrics) and poor-performing companies, focusing on transparency, organizational maturity, and management quality.

Which keywords best characterize this research?

Key terms include SME, IPO, Growth Pains, Organizational Life Cycle, Value-Based Management, and Principal-Agent Theory.

How is the distinction between "Performers" and "Non-Performers" defined?

"Performers" are identified as companies that explicitly communicate and implement value-based performance measures like EVA and ROCE, while "Non-Performers" lack these sophisticated steering mechanisms.

What role does the Economic Value Added (EVA) play in this study?

EVA is used as the ultimate indicator for growth and value creation, helping to distinguish companies that effectively manage resources from those that potentially destroy shareholder value.

What is the significance of "Organizational Maturity"?

Organizational maturity relates to the development of systems and routines capable of handling external growth; companies with higher maturity demonstrate a better ability to avoid the pitfalls of early-stage growth.

Does the author conclude that IPO success is solely dependent on management quality?

The author concludes that while IPO success at the point of listing is often decoupled from long-term management quality, the post-IPO survival and growth are heavily dependent on a clearly defined, value-oriented management system.