Working Paper: NBER ID: w31126
Authors: Ginger Zhe Jin; Mario Leccese; Liad Wagman
Abstract: We examine how public firms listed in North American stock exchanges acquire technology companies during 2010-2020. Combining data from S&P, Refinitiv, Compustat, and CRSP, and utilizing a unique S&P taxonomy that classifies tech M&As by tech categories and business verticals, we show that 13.1% of public firms engage in any tech M&A in the S&P data, while only 6.75% of public firms make any (tech or non-tech) M&A in Refinitiv. In both datasets, the acquisitions are widespread across sectors of the economy, but tech acquirers in the S&P data are on average younger, more investment efficient, and more likely to engage in international acquisitions than general acquirers in Refinitiv. Within the S&P data, deals in each M&A-active tech category tend to be led by acquirers from a specific sector; the majority of target companies in tech M&As fall outside the acquirer’s core area of business; and firms are, in part, driven to acquire tech companies because they face increased competition in their core areas.
Keywords: Technology M&As; Innovation; Public Firms; Competition
JEL Codes: D04; D22; L1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Competition in core business areas (L13) | Firms seek technology acquisitions (L24) |
| Firms seek technology acquisitions (L24) | Entry into new technological domains (O36) |
| Firms that do not specialize in technological innovation (L19) | Use M&As to access new technological capabilities (O36) |
| Tech M&As (G34) | Widespread across sectors (L89) |
| Acquirers with tech acquisitions (G34) | Conduct multiple acquisitions (G34) |
| Tech M&As (G34) | Access new technology categories (Y90) |