Three essays on Mergers and Acquisitions (M&A)

In the first study (chapter 2), the relationship between business strategy and M&A target selection is explored. In order to categorize business strategy, the framework proposed by Miles and Snow (1978, 2008) was employed on a selection of US publicly listed companies from 1995 to 2019. For the empirical analysis, several OLS regression models were conducted to predict business strategy of the target firm using continuous and categorical measures for business strategy. The results of these regressions suggest that firms are more likely to acquire other firms with a similar business strategy, e.g., prospectors acquire prospectors and defenders acquire defenders. Furthermore, this effect has found to be stronger in same-industry deals. The second study (chapter 3) empirically investigates the impact of business strategy on post-acquisition operating performance. A sample of 795 to 1249 M&A deals between 1995 and 2014 was taken and their business strategies calculated according to the typology proposed by Miles & Snow (1973, 2008). The main results using ROS show that firms which follow a prospector business strategy for both acquiror and target firm can be expected to have slightly better post-merger operating performance in terms of ROS and ROA compared to defender business strategy firms. In the third study (chapter 4), the impact of withdrawn or failed mergers and acquisitions on M&A short-term performance is investigated by exploring deal completion status on cumulative abnormal return on different time windows using a sample of 952 US publicly listed companies from 1995 to 2019. The results show that withdrawn merger deals have a negative impact on the target firm’s cumulative abnormal return. However, little to no impact on acquiror firm CAR has been detected. Strong and significant models could be built to investigate ROA, however deal status did not have a significant impact on it.