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Merger and acquisition (M&A) activity represents a major force in the global business environment, whether measured by the number or the value of deals. Even though existing research finds acquisitions, on average, do not improve firm performance, the dominant explanation for why firms pursue acquisitions is that they seek increased performance. There is a recognized need to model post-acquisition performance to help distinguish between acquisitions that will fail and those that will succeed. By addressing methodological shortcomings in existing post-acquisition performance research, the present research develops a model for predicting when acquisitions of high-technology targets result in improved performance. Implications for both theory and managerial practice are identified.
This volume brings together the best research in acquisition strategy by leading scholars in the field of mergers and acquisitions. Important new findings in this volume detail how cultural considerations and differences help to predict the success or failure of an acquisition strategy.
Few studies have addressed the performance of smaller unquoted companies involved in take-overs, especially in the Continental European countries. Therefore this study addresses the post-take-over financial characteristics of privately held companies involved in 143 Belgian take-overs between 1992 and 1994. Specifically, this paper examines the financial performance of the acquiring firm after the take-over, using statistical analysis of industry-adjusted variables. Our findings show that following the take-over, the profitability, the solvency and the liquidity of most of the combined companies decline. This decline is also reflected in the failure prediction scores. With respect to the added value, take-overs are found to be accompanied by increases in the labour productivity, caused by the general improvement of gross added value per employee of Belgian companies in the last ten years and partly caused by laying off the target's workers. So it seems that, contrary to the general expectations and beliefs, take-overs usually do not seem to improve the acquirer's financial performance.
This groundbreaking study, cited in Business Week, explains how companies often pay too much--and never realize goals of increased performance and market strength--in their quests to acquire other companies. By examining such variables as method of payment and strategic relatedness, Sirower provides the first formal definitions for synergies. 10 illustrations.
Modern corporations utilize mergers and acquisitions as strategies to develop shareholder value today more than ever before, yet the need for understanding firms’ rationale and strategy is critical in predicting post-merger stock performance for all investors. I apply the interpretive power of textual analysis and regression to a corpus of SEC mergers and acquisitions public company filings between 1994-2017. Not only do I challenge the statistically significant correlation between word content and post-transaction abnormal stock returns, but I also characterize the effects of time segments, transaction size, and industry variation across time. As a final application, I consider sentiment analysis using Diction software packages across the corpus, and measure correlation across economic cycles to assess post-filing stock performance.
This paper examines the hypothesis that, during merger waves, a bidder's actions are informative for other bidders and the market. I develop a real options model to explore the interplay between acquisition timing and the market reaction to these events in the context of merger waves. The model predicts a pattern of declining announcement returns along the merger wave and novel forms of contagion returns. I take these contagion predictions to the data in a sample of U.S. industries that underwent regulatory changes in the 1990s. Consistent with the model's predictions, I find that the dispersion in bidders' post-acquisition performance declines along the merger wave and that the start of a merger wave is associated with an increase (decrease) in the conditional correlation of bidders' stock returns and the stock returns of other bidders (a broad stock index). These theoretical and empirical results suggest that a rich set of channels of contagion returns and deal anticipation are at play during merger waves.
The chapters published in this volume provide cutting edge ideas by leading scholars, and help to inform mergers and acquisitions research around the world.
This Research Agenda poses unique questions and perspectives on how to generate impactful research on mergers and acquisitions. Bringing together a mix of established and emerging scholars, it outlines how future research in the field can enable managers to make better decisions and improve mergers and acquisition success.