Does acquisition lead to the growth of high-tech scale-ups? Evidence from Europe

Anže Burger, Teresa Hogan, Patricia Kotnik, Sandeep Rao and Mustafa Erdem Sakinç

Research in International Business and Finance, 2023, vol. 64, issue C

Abstract: The post-acquisition growth of high-tech scaleups has received relatively little research attention. This is surprising since buyers are known to target these firms for growth opportunities whilst sellers increasingly seek strategic partners to access resources to scale their ventures. We examine the post-acquisition revenue and employment growth of high-tech scaleups in a multi-country setting, comprising five European economies. Using a propensity-score matching approach and difference-in-differences regression, for a sample of 2187 high-tech scaleups, we demonstrate that acquisition has a positive effect on target firms equivalent to cumulative growth of revenue (employment) of 9–13 (6−10) percent after five (four) years, relative to control firms. We find that nationality matters such that the targets of foreign-owned acquirers exhibit significantly higher cumulative revenue and employment growth than their domestic counterparts. Taking a longer-term perspective, we show that growth dips in the first year, then stabilizes and accelerates in the years following acquisition, indicating a period of adjustment.

Keywords: Acquisitions; Cross-border acquisitions; Domestic acquisitions; Firm growth; High-tech scaleups; Propensity-score matching (search for similar items in EconPapers)
JEL-codes: D22 F21 G34 L26 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:64:y:2023:i:c:s0275531922002069

DOI: 10.1016/j.ribaf.2022.101820

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