In mergers and acquisitions (M&As), brands account for significant but heterogeneous proportions of overall transaction value. The marketing literature focuses on the drivers of financial value of brands when there is no change in the ownership of brands. However, in M&As, the value of brands also depends on how their new owners leverage them. This study identifies both the target and the acquirer firm characteristics that affect the value of a target firm's brands in M&As. The study uses audited measures of acquired brand value from Securities and Exchange Commission filings (made available as a result of recent statutory reporting requirements) along with data collected from diverse secondary sources. The empirical test of the model is based on 133 M&A transactions in which acquirers attribute value to target firms’ brands. The results indicate that acquirer and target marketing capabilities and brand portfolio diversity have positive effects on a target firm's brand value. The positive impact of acquirer brand portfolio diversity and target marketing capability is lower when the M&A is synergistic than when it is nonsynergistic. The findings are robust to various model specifications, measures, endogeneity, and sample selection.
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