The value of intangible capital transfer in mergers

We find that the value is created for acquirer shareholders in the mergers involving intangible capital transfer from targets to bidders; such value creation is positive and significant in the transfer of off-balance-sheet intangible capital and organizational capital as opposed to that of knowledge capital. Because the combined returns for bidders and targets are increasing in intangible capital transfer (while those of targets remain unaffected), we believe that the market perceives such transfers potentially create synergy. The market reaction to intangible capital transfer is positive and significant for bidders facing high-product market competition, in nondiversifying deals, and for high-tech combinations.