We aim to assess the impact of acquisitions on growth of European high-tech entrepreneurial firms. The paper explores whether firms acquired by a corporate investor enjoy higher growth than their non-acquired counterparts and whether the effect on target firm growth differs between foreign and domestic acquirers. It also explores whether firms acquired by a corporate investor outperform those acquired by a financial investor. Using a propensity-score matching approach and difference-indifferences regression, we estimate the effect of acquisitions on the cumulative growth of revenue and employment from the year before the acquisition to up to 5 years after, for a sample of 4714 acquisition targets from 5 EU countries between 2003 and 2015. Our results show that acquisitions have a positive effect on growth of high-tech entrepreneurial firms and that growth is not significantly different between firms acquired by an established company and those acquired by a financial buyer. The nationality of the acquirer does matter, however. Foreign-owned firms exhibit significantly higher cumulative revenue and employment growth than the ones with domestic acquirers.
The impact of acquisitions on growth of European hightech entrepreneurial firms
Patricia Kotnik
Faculty of Economics, University of Ljubljana
Erdem Sakinc
CEPN, Université Paris 13