Do acquirers benefit from target alliance? Taking a relational view of synergy

Although relational resources and rents derived from interfirm partnerships represent an important source of firm value, extant M&A research has focused on synergies involving resources that target firms own or control. This study builds on the relational view of the firm to examine whether and under what conditions acquirers benefit from resources embedded in target firm alliance relationships. We investigate these questions using an event study methodology and a sample of 344 biopharmaceutical acquisitions in the USA. We find that an acquired firm’s alliance activity has an inverted U-shaped relationship with acquirer abnormal stock returns. We also find that this relationship is positively moderated by the acquirer’s experience with acquiring companies with alliances. These results contribute to the acquisition and organizational learning literatures by showing how relational resources of target firms and acquirer experience in dealing with such resources interact to influence value creation and capture in acquisitions.