Target Selection Strategies in Mergers and Acquisitions in the Medical Technology Industry1

This paper identifies attributes of target companies and proposes a theory to explain and support the decision making of acquiring companies in selecting target companies. It draws on three perspectives: resource-based view (RBV), market power and organizational theory. In order to fulfill this, four in-depth case studies were conducted across three primary sectors in the Medical Technology Industry. Data were collected by series of semi-structured interviews and were analyzed to explore the strategies of target selection in the Medical Technology Industry, typically from RBV, industry characteristics, and acquisition experiences. Findings include eight propositions to support and enrich the conceptual framework and result in a new target selection framework. These eight propositions considers the three major resources: R&D, manufacturing, and marketing in the RBV, important features of industry and acquisition experience by investigating their relationships with target selection, motives, and the stage of the targets. Finally, as a key concept in the propositions, mature business is interpreted in the circumstance of the Medical Technology Industry.