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How Do Top Acquirers Compare in Technology Mergers? New Evidence from an S&P Taxonomy

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  • Jin, Ginger Zhe
  • Leccese, Mario
  • Wagman, Liad

Abstract

Some argue that large platforms, such as Alphabet/Google, Amazon, Apple, Facebook and Microsoft (or GAFAM), are unusual in their number, pace and concentration of technology mergers, with the potential to harm market competition. Using a unique taxonomy developed by S&P Global Market Intelligence, we conduct a descriptive study of GAFAM’s M&A activities, comparing them to those of other top acquirers from 2010 to 2020. We find: (i) GAFAM completed more tech acquisitions per firm than other groups of top acquirers, and acquired younger and more consumer-facing firms on average. (ii) The top 25 private equity firms outpaced GAFAM in tech acquisitions per firm since 2018. (iii) GAFAM acquisitions are less concentrated across tech categories than other top acquirer groups, due, in part, to an “acquire-adjacent-and-then-expand” strategy. (iv) Over time, more and more GAFAM and other top acquirers acquire in the same categories. (v) No evidence suggesting that a GAFAM acquisition in a category, compared to similar categories without GAFAM acquisitions, is correlated with a slowdown in the number of new acquirers acquiring in that category. Overall, we find that technology acquisitions do not shield GAFAM from potential competition that may arise from other GAFAM members or other firms that acquire in the same categories.

Suggested Citation

  • Jin, Ginger Zhe & Leccese, Mario & Wagman, Liad, 2023. "How Do Top Acquirers Compare in Technology Mergers? New Evidence from an S&P Taxonomy," International Journal of Industrial Organization, Elsevier, vol. 89(C).
  • Handle: RePEc:eee:indorg:v:89:y:2023:i:c:s0167718722000662
    DOI: 10.1016/j.ijindorg.2022.102891
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    Cited by:

    1. Zhaoqi Cheng & Ginger Zhe Jin & Mario Leccese & Dokyun Lee & Liad Wagman, 2023. "M&A and Innovation: A New Classification of Patents," AEA Papers and Proceedings, American Economic Association, vol. 113, pages 288-293, May.

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    More about this item

    Keywords

    Technology; Merger; Acquisition; Antitrust;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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