Guidance for ensuring technology acquisition resulting in long-term performance
In their recent research entitled "Long-term performance of technology acquisitions: The role of acquisition program diversity, innovation, and alliance portfolio size – Evidence from the pharmaceutical industry", our affiliate member Lars Schweizer and colleagues Le Wang and Eva Koscher from Goethe University Frankfurt attempted to capture how the acquisition program diversity affects the long-term market performance of M&A deals. By studying the pharmaceutical industry case, they found that the performance of the focal acquisition largely depends on the firm's past acquisitions and the stock of the current resources that the acquirer possesses.
Notably, the performance of technology acquisitions depends on how acquirers' past target firms vary in their value chain positions. At the moderate diversity level, the benefits of increasing acquisition program diversity tend to be larger than the costs, highlighting a positive impact on acquisition performance. Moreover, this effect is contingent on acquiring firms' innovation level and alliance portfolio size. Hence, this study shows how serial acquirers can benefit from this diversified acquisition experience in their technology acquisitions.
Download the full text of the paper published in the European Management Journal to learn more about this research.