A framework is suggested for the evaluation of the effects of external takeover on regional economic performance, and an approach is offered to identify the impact of takeover on the performance of the acquired firm. The approach is then applied to estimate the effects of external takeover on the performance of Scottish manufacturing companies between 1965 and 1980. The results show that external takeover improved sales performance but lowered rates of return in acquired firms. Employment was, in general, unaffected. Overall, the effects on acquired firms are judged to have been beneficial, but evidence of harmful effects on the wider regional economy suggests that it cannot be assumed that such takeovers will not be against the public interest.
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