Private Equity, Corporate Acquirers, & Product Innovation: An Investigation of Corporate Science Acquisitions 1990-2022

Paul Nary, Management, The Wharton School; Sathyanarayan Vijayakumar, PhD Candidate, The Wharton School; Harbir Singh, Management, The Wharton School; Rahul Kapoor, Management, The Wharton School

Abstract: Private equity has become an increasingly active player in technology acquisitions in recent years, yet most strategy scholarship has focused on the effects of corporate acquirer ownership on innovation outcomes, providing little guidance to managers on how to choose between the two M&A options. To remedy this gap, I examine how private equity and corporate acquirers differentially affect product innovation at acquired targets using hand-collected new product introduction announcements. I construct a firm-year panel data set of acquisitions in the chemicals, biopharmaceuticals, and medical device industries between 1990 and 2019, tracked yearly through 2022. Our results illuminate the opportunities and tradeoffs facing managers in choosing between private equity and corporate acquirers.