Post-merger performance in the software industry: The impact of characteristics of the software product portfolio

This article studies the impact of the characteristics of software product portfolios on the performance of firms involved in a merger of software companies. The short-term financial results reveal that markets generally seem to neglect the characteristics of software product portfolios when the merger is announced. Nevertheless, such portfolios appear to have a positive impact on the price/book value ratio of merged software firms. The empirical evidence presented in this paper suggests that, in the long term, the performance of business combinations in the software industry is related to certain factors that are attributable to virtual network effects.