Abstract
Technological transformation of the economy is pushing companies to create or improve their technological capabilities. One of the ways to acquire technology and knowledge that allows companies to remain competitive is mergers and acquisitions (M&A). The efficiency and motives of M&A transactions with motivation of obtaining new technology and knowledge are the subject of a large number of studies. The contradictory results of studies of technological M&A transactions can be explained by the gaps of the empirical analysis or the weakness of the theoretical knowledge. The purpose of this study is to review the theoretical works on the effectiveness of M&A transactions in order to acquire technology and knowledge, and to identify the main results in this area. In particular, the motives of technological M&A deals were identified; the technological overlap of the parties of the M&A transactions and the relationship between the intensity of R&D expenses, innovative activity and company efficiency were described. In order to identify the relevant key determinants of the effectiveness of technological M&A transactions the motives of traditional M&A transactions were also examined. As a result of the analysis, it was revealed that the technological similarity between the acquiring and acquired companies have positive effect on the reaction of investors and on the effectiveness of the transaction, however, it negatively affects the overall effectiveness of the buyer company. The intensity of R&D expenses and innovative activity demonstrate inconsistent results on companies’ performance. Factors that have direct or indirect impact on the integration between companies - have contradictory results on both parties of a deal. Based on the existed literature the effectiveness of M&A transactions with the aim of acquiring technology and knowledge is associated with uncertainty for investors caused by the risks of such transactions in different sectors of the economy, the motives of managers and the characteristics of the parties of the transactions.
Highlights
Under modern rapidly changing conditions technological development increases influence on various economy sectors [1,2,3] and plays a significant part in improving competitiveness, productivity and, in general, in successful performance of companies
One of the ways of acquiring technological knowledge and developments which are beyond their powers is mergers and acquisitions (M&A) [7,8,9]
Successful results of a M&A deal depend on the degree to which internal research and development of the acquiring company correspond to the purchased technologies and knowledge [3]
Summary
Under modern rapidly changing conditions technological development increases influence on various economy sectors [1,2,3] and plays a significant part in improving competitiveness, productivity and, in general, in successful performance of companies. The authors found out that companies got a significant excess profitability when they announced implementation of various information technologies or related information systems in the company operations which indicated a positive investors’ response. The literature dedicated to M&A deals intended to purchase technologies and knowledge is indicative of the positive excess profitability for the acquired, as well as for the acquiring company [29,30,31]. Successful results of a M&A deal depend on the degree to which internal research and development of the acquiring company correspond to the purchased technologies and knowledge [3]. Existence of similarities in the technological development of the companies involved in M&A has a positive influence on investors’ response as well as on the deal efficiency, but the excessive number of duplicate research and development affects the total efficiency of the buyer company
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Schedule a callMore From: Journal of Corporate Finance Research / Корпоративные Финансы | ISSN: 2073-0438
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