M&A and Technological Expansion

33 Pages Posted: 26 Jan 2022

See all articles by Ginger Zhe Jin

Ginger Zhe Jin

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Mario Leccese

University of Maryland - Department of Economics

Liad Wagman

Illinois Institute of Technology - Stuart School of Business, IIT

Date Written: January 15, 2022

Abstract

Mergers and acquisitions (M&A) provide an important way for firms to expand technologically. In this paper, we examine how public firms listed in North American stock exchanges acquire technology companies during 2010-2020. Combining data from Compustat, CRSP, Refinitiv, and S&P on M&A, and utilizing a unique S&P taxonomy that classifies M&A by tech categories and business verticals, we show that (i) only 13.1% of public firms engage in tech M&A but such acquisitions are widespread across sectors of the economy; (ii) larger and older firms are more likely to acquire tech companies; (iii) transactions in each M&A-active tech category tend to be led by acquirers from a specific sector, to varying extents over time; (iv) the majority of target companies fall outside the acquirer's core area of business; and (v) firms are, in part, driven to acquire because they face increased competition in their core areas.

Keywords: Technology, M&A, acquisition, competition

JEL Classification: D22, D4, L1

Suggested Citation

Jin, Ginger Zhe and Leccese, Mario and Wagman, Liad, M&A and Technological Expansion (January 15, 2022). Available at SSRN: https://ssrn.com/abstract=4009215 or http://dx.doi.org/10.2139/ssrn.4009215

Ginger Zhe Jin (Contact Author)

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3484 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER)

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Mario Leccese

University of Maryland - Department of Economics ( email )

Liad Wagman

Illinois Institute of Technology - Stuart School of Business, IIT ( email )

565 W Adams St Suite 412
Chicago, IL 60661
United States
7739809883 (Phone)

HOME PAGE: http://https://lwagman.org

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