The Value Creation of Intellectual Property in Mergers and Acquisitions

Abstract: This thesis examines the shareholder value creation of IP in M&A. Using a unique patent-M&A data set over the period 2006 to 2016, we show that acquirers of companies holding IP gain significantly more shareholder value than acquirers of targets not holding IP. We find that this only holds as a binary relationship, and that the discrete relationship between shareholder value and IP is negative. We also find that potential IP synergies do not increase shareholder value. We conclude that, while IP is a vital part of targets' assets in M&A activities, ambitious valuations and large IP premia may shift future IP-induced value from acquirers to targets.