Determinants of successful M&As :  an empirical study of listed companies in the United States

2019

Since 1985, the U.S. market has been facing an increase in merger and

acquisition activity. In addition to detect potential determinants of M&A

success, this thesis does not only examine the short-term performance of

acquirers and targets, but it also determines the long-term M&A performance

of U.S. acquirers across all industries. With a sample of 1,288

M&As between 2002 and 2015, we found negative short-term abnormal returns

to acquirers using the cumulative abnormal return method. However,

since target shareholders gain significantly higher abnormal returns, M&As

create value overall from a short-term perspective. Acquirers’ negative

short-term abnormal returns persist in being negative over the long-term

analysis. The buy-and-hold abnormal return method in event-time reveals

significant value destruction of 25.8% over a three-year investigation period.

Also, the study detects a significant impact of the acquirer´s and target

´s price-to-book ratio, method of payment, relative profitability, and

deal rationale on the long-term post-acquisition performance. However, the

influence of relative size is inconclusive and could not ultimately be determined

in this study. Lastly, the acquisition attitude (friendly vs. hostile)

and cross-border transactions provided no evidence of affecting deal success.