Human Capital Synergies in Mergers and Acquisitions

Using a unique data set tracking inventors' careers around mergers and acquisitions (M&As) over the period 19812012, we first show a steep increase postmerger in the frequency of collaboration between acquirer and target inventors, and that such collaboration is associated with more radical, impactful, and valuable patents than those filed by either acquirer or target inventor-only teams. We further show that such collaboration is more important in improving acquirers' innovative capabilities than hiring target inventors alone and knowledge spillovers. We conclude that M&As achieve human capital synergies by expanding the opportunity set for inventor collaboration, resulting in more path-breaking innovation