How do firms learn to make acquisitions?: a review of past research and an agenda for the future

How do firms learn to successfully acquire other firms? The authors first review early work, mostly from the 1980s to the mid-1990s, testing the learning curve perspective on acquisitions and exploring some contingencies. They then discuss three more recent streams of research on negative experience transfer, deliberate learning mechanisms, and learning from others, which provide deeper insight into the contingencies and mechanisms of organizational learning in strategic settings such as acquisitions. The article concludes with an agenda for future research

Adverse Selection in Acquisitions of Small Manufacturing Firms: A Comparison of Private and Public Targets

This study investigates acquisitions of small manufacturing firms and compares private and public targets. We develop the argument that private targets tend to involve higher transaction costs in the presence of adverse selection problems than their public counterparts. Consistent with predictions, the empirical evidence indicates that bidders choose to acquire public rather than private targets when acquiring young firms and when engaging in inter-industry transactions. Acquirers also tend to avoid private targets that have significant intangible assets and have not signaled the value of these resources through other means such as collaborative agreements. The results shed light on the benefits of being public and the decision-making criteria employed by acquiring organizations. Copyright Springer 2005