The upside-down world of value capture. Do companies in technology sector follow the principles of profitable growth?

V. Vinogradova
Additional contact information
V. Vinogradova: HSE University, School of Finance, Moscow, Russia

Journal of the New Economic Association, 2024, vol. 62, issue 1, 171-195

Abstract: The technology sector has been showing a constant increase in the number of M&A transaction over the last years, setting record in both deal volume and value. For many companies, this is the only way to obtain the unique resources and build capacity necessary to succeed in the fast-paced business environment. The current paper investigates whether the strategic deals, which have been driving the technology sector over the last decade, can be considered value-creating and had a positive impact on the acquirers' long-term financial performance. To analyze the changes in the performance of bidding companies both univariate and multiple-regression analyses were performed. The results show that overall the acquiring companies could not achieve profitable growth and fully capture value and the benefits of M&A. The acquirers showed rather a deterioration in post-acquisition profitability, efficiency, and growth. The focus (international and industrial) was associated with the best results in terms of both profitability and growth, while the largest increase in post-event growth rates was achieved by the companies from the emerging markets and in the first years following the completion of the deal.

Keywords: growth strategy; technology sector; corporate M&A; profitable growth; shareholder value creation; valuation (search for similar items in EconPapers)
JEL-codes: G14 G32 G34 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.econorus.org/repec/journl/2024-62-171-195r.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2024:i:62:p:171-195

DOI: 10.31737/22212264_2024_1_171-195

Access Statistics for this article

Journal of the New Economic Association is currently edited by Victor Polterovich and Aleksandr Rubinshtein

More articles in Journal of the New Economic Association from New Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Alexey Tcharykov ().