Technology differentiation, product market rivalry and M&A transactions

We study how unique firm technology influences M&A activity. Using a text-based network approach, we map each firm’s position relative to every other firm in technology space to measure the uniqueness of its technology portfolio. Our findings indicate that firms with more unique technology portfolios become prime acquisition targets, particularly for close competitors within the same product market segments. These competitors seek to reduce competition and incorporate unique technologies to strengthen their competitive advantage. Furthermore, firms with unique technology portfolios tend to attract acquirers with closer technological proximity, facilitating the evaluation and integration of these technology assets. Our study underscores unique technology as a critical asset in the market for corporate control and a key driver of M&A transactions.