Private target acquisitions also increase innovation synergies while public target acquisitions do not.
The positive effects concentrate on acquirers with better expertise in identifying innovative private targets; they have higher managerial ability or own corporate venture capital divisions. The positive effects do not relate to targets' existing patenting. The differences in innovation outcomes when
acquiring private versus public targets explain away the higher announcement returns for private target acquisitions. We conclude that complementary capabilities of innovation are an important driver for value creation in private target acquisitions.

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