Patent Thickets and Mergers and Acquisitions*

We study how patent thickets, which are clusters of interdependent patents that raise the cost of using or combining technologies, shape acquisition decisions. Firms are less likely to be acquired when their patents are embedded in external thickets, which exacerbate coordination and bargaining frictions. Conversely, firms are more likely to be acquired when their patents form internal thickets, which mitigate these costs by consolidating control over related technologies. When acquirers and targets share an external thicket, acquisition probability rises when acquirers depend on targets but falls when targets depend on acquirers, underscoring the asymmetric role of technological dependence in acquisitions. (JEL G34, L14, O32, O34)