RESEARCH NOTES AND COMMENTARIES
Performance of acquirers of divested assets: Evidence from the U.S. software industry
Article first published online: 28 MAY 2013
Copyright © 2013 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 35, Issue 6, pages 914–925, June 2014
How to Cite
Laamanen, T., Brauer, M. and Junna, O. (2014), Performance of acquirers of divested assets: Evidence from the U.S. software industry. Strat. Mgmt. J., 35: 914–925. doi: 10.1002/smj.2120
- Issue published online: 11 MAY 2014
- Article first published online: 28 MAY 2013
- Accepted manuscript online: 14 MAR 2013 03:37PM EST
- Manuscript Accepted: 4 FEB 2013
- Manuscript Revised: 1 FEB 2013
- Manuscript Received: 25 MAR 2012
We provide a comparative analysis of acquirer returns in acquisitions of public firms, private firms, and divested assets. On the basis of a sample of 5,079 acquisitions by U.S. software industry companies during 1988–2008, we find that acquisitions of divested assets outperform acquisitions of privately held firms, which in turn outperform acquisitions of publicly held firms. While the higher returns for acquisitions of divested assets relative to stand-alone acquisition targets can be explained by market efficiency arguments, seller distress and improved asset fit further enhance the positive returns of acquirers of divested assets consistent with the relative bargaining power explanation. Finally, we find that the effects of these buyer bargaining advantages are mutually strengthening and that they also hold for longer-term acquirer performance Copyright © 2013 John Wiley & Sons, Ltd.