A comparative analysis of international and domestic acquisitions: what drives acquirer competitiveness?

Abstract

Despite several decades of research in the context of mergers and acquisitions (M&As), an understanding of acquirer competitiveness in international vis-a-vis domestic acquisitions remains inconclusive. This empirical study presents a comparative framework to identify a set of intangible factors that differentiate the long-term competitiveness of acquirers engaging in both of these types of acquisitions. Building on the information asymmetry logic, we find that access to accurate information, acquirers' research and development (R&D) intensity, and similarity between the acquirer and the target play a vital role in determining the overall competitiveness of acquirers. Using a sample of all the M&As that occurred between 1985 and 2007 and applying a matching control methodology, sound comparisons are made to draw conclusions. From a theoretical standpoint, the findings help generalise the importance of intangible factors from the contextual, acquirer-centric, and dyadic angles. From a practical viewpoint, the conclusions enable managers to evaluate their firms' preparedness for international vis-a-vis domestic acquisitions.