Seminar by Prof. Joachim Henkel, Technische Universität München
Event details
| Date | 24.05.2017 |
| Hour | 12:00 › 13:30 |
| Speaker | Prof. Joachim Henkel, Technische Universität München |
| Location | |
| Category | Conferences - Seminars |
"Technology-focused Acquisitions: Performance and Functionality as Differentiators"
Abstract
The acquisition of high-tech startups is of increasing importance for incumbents as a path of technology sourcing. Combining qualitative and quantitative research we introduce a novel categorization of such acquisitions based on how the startup’s technology relates to the acquirer’s existing products. Specifically, we distinguish between acquisitions aimed at improving product performance and those that shall add new functionality. Taking a decision making perspective with a focus on the technological and market risks of both types of acquisitions, we theorize how this categorization relates to acquisition timing and deal value. We argue that performance-focused acquisitions should take place earlier in a target's life cycle than functionality-focused ones, and that their deal value at equal levels of maturity is higher. We test our hypotheses using a unique dataset of 215 acquisitions by U.S. firms in the field of artificial intelligence, finding our main hypotheses supported. Based on our findings we derive management implications for acquirers as well as for startups.
Abstract
The acquisition of high-tech startups is of increasing importance for incumbents as a path of technology sourcing. Combining qualitative and quantitative research we introduce a novel categorization of such acquisitions based on how the startup’s technology relates to the acquirer’s existing products. Specifically, we distinguish between acquisitions aimed at improving product performance and those that shall add new functionality. Taking a decision making perspective with a focus on the technological and market risks of both types of acquisitions, we theorize how this categorization relates to acquisition timing and deal value. We argue that performance-focused acquisitions should take place earlier in a target's life cycle than functionality-focused ones, and that their deal value at equal levels of maturity is higher. We test our hypotheses using a unique dataset of 215 acquisitions by U.S. firms in the field of artificial intelligence, finding our main hypotheses supported. Based on our findings we derive management implications for acquirers as well as for startups.
Practical information
- General public
- Free