Does Technology Matter When Selecting a Target Firm in an M&A? Some Evidence on a European M&A Sample

Using a sample of European M&As from 2009 to 2017, this work assesses whether there is a linkage between a firm's innovation orientation and its participation in an M&A. This main aim has been divided into three aims: defining the target firms’ characteristics in M&A deals with a special focus on innovation orientation, performance, financial structure and size; understanding what kind of firm is generally acquired from institutional investors; describing the effects of M&A deals on the targets. With reference to the analysis method, aims were pursued through logistic regressions on the cross-sectional sample and by comparing pre-deal and post-deal average balance values. The result is twofold. First, a high probability of being targeted is associated with high portfolio patents and low research and development costs of a firm, but only in cases of technological overlap; otherwise the R&D intensity, performance and size of firms are relevant. Second, when analysing the effects of M&As, comparing the same variables in post vs. pre deal period, they are only significant for patent and R&D costs. These results confirm that the M&A transactions produce useful synergy in terms of innovation capability.