Dead or alive? The future of target firms after cross-border acquisitions

Building on the subsidiary evolution perspective, this paper investigates the survival of firms acquired by foreign investors. We examine the likelihood of survival as a function of three main factors: a) cultural distance between the countries of the acquiring and acquired firms; b) previous experience of the acquirer in the host country; and c) business similarity between acquirer and target. Based on a sample of 396 Italian firms acquired by foreign multinational companies in the period 2005-2015, results suggest that acquired firms are more likely to survive in case the acquirer benefits from previous country-level experience and in case of business similarity. Overall, our analysis confirms that context familiarity, in terms of both country and business contexts, plays a fundamental role in determining the destiny of acquired firms.