Exiting the market by mergers and acquisitions. Does the crisis matter

Abstract

Mergers and Acquisitions (M&A) have been extensively and thoroughly studied as a result of a decision on exiting the market. Most attention has been directed to M&A occurring during business booms when numerous deals take place and prices are high. Conversely, least attention has been devoted to M&A during a crisis or just after recessionary periods.Using a sample of 358 mergers that occurred in Europe before (145) and after (213) the financial crisis, this paper explores if and to what extent the innovation profile of incumbents affects the exit decisions through M&A before and after the crisis.Internal R&D and product innovations are major drivers of deals in young industries, whereas process innovation plays a crucial role in mature industries. Patents are the only key innovation drivers of M&A after the crisis, both in young and mature industries. We furnish here some explanations of the mechanisms behind these emergent behaviours.