The sources of value creation in acquisitions of intangible assets

We document that acquirer announcement returns and post-M & A performance rise with a target's pro-portion of intangible assets. This shareholder wealth creation is associated with profitable acquirers pur-chasing complementary intangible assets and promising growth options from less profitable targets. Pur-chase prices are lower when targets face financial constraints limiting their ability to pursue promising investment opportunities. Analyzing acquisitions across different classes of intangible assets and match-ing successful with failed bids for targets with intangible assets support our main findings and suggest that these results are robust to endogeneity concerns. We conclude that target intangible assets provide important sources of M & A value creation.& COPY; 2023 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license ( http://creativecommons.org/licenses/by/4.0/ )