The Revealed Preferences of High Technology Acquirers
Author | : Panos Desyllas |
Publisher | : |
Total Pages | : 35 |
Release | : 2014 |
Genre | : |
ISBN | : |
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In this paper we investigate the motives of high-tech acquirers by analysing their revealed preferences in terms of the high-tech companies they acquire. Using a large sample of acquisitions involving publicly traded firms from various countries we ask whether high technology acquisitions are best understood in terms of acquirers seeking to source externally special innovation-related assets by acquiring firms with quot;superiorquot; innovative performance; or acquirers seeking to acquire firms with quot;inferiorquot; innovative performance in order to turn them around. We find evidence that acquisition is a very noisy phenomenon and that economic and innovation related variables explain only a modest part of the probability of becoming a target. We do however find that, compared to non-acquired firms, high-tech targets tend to be somewhat larger, to have poorer profitability, lower Tobin's q and liquidity. In relation to their innovative profile, targets, in general, seem to have a relatively larger stock of accumulated knowledge (stock of citation-weighted patents), relatively higher Ramp;D inputs (Ramp;D-intensity), but they are more likely to generate no Ramp;D output (citation-weighted patent-intensity) before they are acquired. We conclude that high technology acquisitions reflect a process which is primarily driven by acquirers wishing to exploit the potential for turning around firms which, despite a good past record, appear to be innovatively and economically inefficient before they are acquired.