Previously, we summarized information on acquisition activity, and we noted pre-acquisition differences between acquiring and target firms. One conclusion was that acquisitions likely performed better than generally assumed. For example, a common perception of acquisitions is that they can increase performance by better allocating resources (Dutz, 1989). By acquiring another company, a firm can gain access to a larger customer base, established distribution channels, and valuable intellectual property. This can result in increased efficiencies and cost savings, as well as the ability to leverage the expertise and knowledge of the acquired company. Even if acquisitions do not benefit an acquirer, they can help an economy optimize their resource allocation and improve their competitiveness. As a result, we now examine whether acquisitions benefit firms, and whether those benefits vary across time and countries.
