Abstract
The general purpose of this paper is to investigate the effects of ownership change on the performance of private and closely held companies. The research is conducted on a single European country, Denmark, in the period from 1991 to 1999. We test the matching theory of ownership change presented by Lichtenberg and Siegel (1992) and find empirical support on the hypothesis that changes in ownership via acquisition can be a mechanism to correct for lapses in efficiency. Acquisition targets are characterized by a low level of factor productivity at the time prior to the acquisition compared to non acquired companies, and to their industry median. Acquired firms benefit from the change of ownership and improve their productivity and financial performance in the post acquisition period. Among surviving firms, acquisitions have a positive effect on sales and employment growth, suggesting an increase in the scale and efficiency of the firm. Selectivity bias and endogeneity have been taken into account during the estimatio n.
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