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.
Faculty of Economics, University of Ljubljana
CEPN, Université Paris 13