M&As and Innovation: Evidence From Acquiring Private Firms

68 Pages Posted: 11 May 2022 Last revised: 12 Dec 2023

See all articles by Siti Farida

Siti Farida

University of Birmingham

Jana P. Fidrmuc

Warwick Business School - Finance Group

Chendi Zhang

University of Exeter Business School

Date Written: March 8, 2023

Abstract

We show that acquisitions of private targets increase the quantity, quality, and value of acquirers’ patents post-acquisition. The results are stronger for acquirers with expertise from corporate venture capital, with more experience, in industries with changing product markets, and with products in early life cycle stages. Private target acquisitions also increase innovation synergies while public target acquisitions do not. The differences in innovation outcomes when acquiring private versus public targets explain away the higher announcement returns for private target acquisitions. We conclude that innovation outcomes and synergies are important drivers for the value creation of private target M&As.

Keywords: M&As; private target acquisitions; public target acquisitions; innovation; patent

JEL Classification: G34, O31, O32, O34

Suggested Citation

Farida, Siti and Fidrmuc, Jana P. and Zhang, Chendi, M&As and Innovation: Evidence From Acquiring Private Firms (March 8, 2023). Available at SSRN: https://ssrn.com/abstract=4101967 or http://dx.doi.org/10.2139/ssrn.4101967

Siti Farida

University of Birmingham ( email )

Edgbaston, Birmingham B15 2TT
United Kingdom

Jana P. Fidrmuc

Warwick Business School - Finance Group ( email )

Warwick Business School
Coventry CV4 7AL
United Kingdom

Chendi Zhang (Contact Author)

University of Exeter Business School ( email )

Streatham Court
Xfi Building, Rennes Dr.
Exeter, EX4 4JH
United Kingdom

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