The fifth wave of Merger and Acquisition includes an increasing amount of technology acquisitions. Large firms acquire small, technology-centric firms as an external source of knowledge and innovation. A major challenge in these acquisitions is to capture the knowledge of the acquired firm as well as to assimilate and utilize it in the acquiring company. We extend March’s (1991) model of organizational learning through exploration and exploitation with an agent-based model allowing knowledge transfer across organizational boundaries from a target organization to an acquiring organization through (1) retention of employees from the smaller company into the large one or through (2) appropriation of the smaller target company’s organizational code by incorporation of industry best practice or cutting-edge technology. Our preliminary results qualify and extend March’s (1991) conclusions.