The influence of alliance experience on acquisition premiums and post-acquisition performance

Abstract

This paper examines the influence of acquirers' alliance experience on acquisition outcomes. Specifically, we investigate whether or not acquirers with alliance experience pay higher acquisition premiums and achieve improved post-acquisition performance. We also investigate how the impact of acquirers' alliance experience is contingent on the alliance portfolios of target firms. We find that acquirers with alliance experience pay higher premiums to target firms; however, these acquirers do not exhibit any better or worse post-acquisition performance. In addition, we find that the impact of acquirer's alliance experience on acquisition premiums is negatively moderated by target firm's alliance portfolio size or diversity. Finally, we find that the impact of acquirer's alliance experience on post-acquisition performance is positively moderated by target firm's alliance portfolio size. Overall, this study suggests that alliance experience can help acquirers develop organizational knowledge and capabilities, and thus influence acquisition outcomes.