Ownership and cross-border patent sales in M&A transactions

We examine the relation between acquirer and target firm ownership and the probability of a cross-border deal involving patents. By focusing on M&A deals involving intangible assets, we are better positioned to analyze technology sales. We show how different owners on the acquirer and the target side, and their relative position, are related to the decision to conduct a domestic versus cross-border transaction involving patent sales. We find that acquirer bank and fund ownership have very little association with cross-border M&A transactions involving patent sales. However, risk-averse family owners and insiders in an acquirer firm are negatively related to the probability if they are minority shareholders. In contrast, family owners and insiders have a positive association if they are the largest shareholder. We also illustrate how target owners shape cross-border M&A decisions. Family and fund owners in target firms are negatively related to the probability of a cross-border M&A transaction involving patent sales. This is attributable to the fact that the valuation of intangible assets can be overly complicated with foreign acquirers. Thus, target owners can likely secure better deals domestically.