Do acquirers benefit from target alliances? (joint with C. Phelps and M. Goossen)
Although relational resources and rents derived from interfirm partnerships represent an important source of firm value, extant M&A research has focused on synergies involving resources that target firms own or control. This study examines whether and under what conditions acquirers benefit from resources embedded in target firm alliance relationships. We investigate these questions using an event study methodology and a sample of 951 technology acquisitions in the USA. We find that an acquired firm’s alliance activity has a negative effect on announcement period acquirer abnormal returns, but this is followed by positive post-announcement returns. To understand the mechanisms linking target alliances and investor reaction over time, we examine the role of acquirer and target alliance portfolio characteristics as determinants. Our study contributes to the management literature by showing how relational resources of target firms influence value creation and capture in acquisitions.