M&A and Technological Expansion
33 Pages Posted: 26 Jan 2022
Date Written: January 15, 2022
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
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