Does Access to Patent Information Help Technological Acquisitions? Evidence from Patent Library Openings

Technology acquirers face significant information asymmetry when identifying appropriate acquisition targets. We exploit plausibly exogenous variation in the costs of gathering technological information as the result of patent library openings. We find that, after local patent libraries open, firms become more active in technological acquisitions, acquirers prefer targets that are geographically or technologically close to a lesser extent, completion rates for technology M&A increase, and performance improves. Post-merger innovation output is enhanced through more collaboration between inventors of acquirers and their targets. Overall, our study sheds new light on the importance of information-gathering costs in corporate takeovers and on the search for human capital synergies.