The Impact of Experience on Private Target Acquisition in High-Technology Industries

Yuri Jo and Jungho Kim
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Yuri Jo: KISDI (Korea Information Society Development Institute), Jincheon, Chungbuk 27872, Korea
Jungho Kim: Faculty of Business and Law, Swinburne University of Technology, Hawthorn, Victoria 3122, Australia

Sustainability, 2019, vol. 11, issue 6, 1-17

Abstract: This paper investigates the impact of an acquirer’s experience on the acquisition of private firms (i.e., private target acquisition) in high-technology industries by analyzing a dataset of NASDAQ-listed firms operating in information technology (IT) industries. Specifically, this paper examines whether two types of experience (i.e., early venture capital (VC)-backed experience and prior mergers and acquisitions (M&A) experience) matter to the acquisition. We find that both types of experience have positive effects on private target acquisition, while only prior M&A experience positively influences public target acquisition, implying that early VC-backed experience is effective in mitigating information asymmetry related to private target acquisition and exploring opportunities for value creation. We also find that an acquirer’s growth performance and absorptive capacity prior to the acquisition enhance the positive effects of the experiences on private target acquisition.

Keywords: private target acquisition; early venture capital backing; M&A experience; information asymmetry; high-technology industry; information technology (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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