In times of globalization and new emerging markets, companies face escalated pressure to continually adapt to changing environments and to develop appropriate strategy adjustments to stay competitive. To improve performance by expansion, companies engage in mergers and acquisitions (M&A). Volumes (number of deals) and values (price of deals) of M&A have quintupled to a value of almost 4 trillion U.S. dollars (2018) in the last 30 years. This development reflects the growing strategic relevance of those transactions for managers.
Even though M&A are among the most powerful tools for managers to create shareholder value and can substantially upgrade a company's performance, they are also one of the most failure-intensive activities due to global economic uncertainty, the possibility of cultural clashes and managerial self-interest. Consequently, it is essential for shareholders as well as for managers to understand the critical drivers for a successful M&A deal.
In existing research, there is sufficient evidence that M&A benefit the target firms economically whereas the performance impact for acquirers is ambiguous. Moreover, most studies examine M&A activities in the United States or the United Kingdom while Germany is widely neglected despite its global economic relevance.
This study aims to fill this research gap. No previous study explores the effect of DAX 30 M&A activities; nor does any study assess the same combination of influencing factors for a deal's success. Resultingly, this paper contributes to the existing literature by identifying drivers for acquirers' short-term M&A success. Focusing on German companies, it clarifies which factors shareholders use to evaluate M&A transactions. Thereby, it helps managers to determine which deals are more promising than others.
Inhaltsverzeichnis (Table of Contents)
- 1. Introduction
- 2. Theoretical Foundations
- 2.1 Drivers, Importance and Risk Factors of M&A
- 2.2 Relevance of the German Economy in the Global Context
- 2.3 Influencing Factors on M&A Success
- 2.3.1 Geographic Scope: Cross-Border vs. Domestic M&A
- 2.3.2 Industry Relatedness: Cross-Industry vs. Intra-Industry M&A
- 2.3.3 Other Drivers of M&A Success and Risk
- 3. Methodology of the M&A Study
- 3.1 Event Study Approach
- 3.1.1 Time Series Analysis for the Expected Return Estimation
- 3.1.2 Calculation of the Cumulative Abnormal Return
- 3.2 Regression Analysis
- 3.1 Event Study Approach
- 4. Data and Sample Selection
- 5. Results and Analysis
- 5.1 Results of the Cumulative Abnormal Return Calculation
- 5.2 Regression 1 – Full Regression Model
- 5.2.1 Underperformance of Cross-Border Deals
- 5.2.2 Underperformance of the Banking Industry
- 5.2.3 Underperformance of Non-Tech Acquirers
- 5.3 Regressions 2.1 and 2.2 – Separation of Cross-Border and Domestic Deals
- 5.3.1 Underperformance of Cross-Border Deals within the EEA
- 5.3.2 Overperformance of Domestic Conglomerates and Tech-Acquirers
- 5.4 Regressions 3.1 and 3.2 – Separation of Cross-Industry and Intra-Industry Deals
- 5.5 Regression 4 – Industry Comparison
- 5.6 Regression 5 – Banking Industry
- 6. Implications and Limitations of the Study
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This study investigates the determinants of success in mergers and acquisitions (M&A) transactions through an event study analysis. The research aims to identify and assess the impact of various factors, such as geographic scope, industry relatedness, and acquirer characteristics, on the success of M&A deals. The study focuses on analyzing the abnormal returns of German companies involved in M&A activities, providing insights into the dynamics of the German M&A market.- Impact of geographic scope on M&A success (cross-border vs. domestic)
- Influence of industry relatedness on M&A outcomes (cross-industry vs. intra-industry)
- Role of acquirer characteristics in determining M&A performance
- Analysis of the German M&A market and its performance in relation to global trends
- Application of event study methodology to evaluate the impact of M&A transactions on firm value
Zusammenfassung der Kapitel (Chapter Summaries)
- Chapter 1: Introduction - This chapter introduces the topic of M&A transactions and their importance in the business world. It outlines the research problem and the objectives of the study. The chapter provides an overview of the theoretical foundations and methodology used in the analysis.
- Chapter 2: Theoretical Foundations - This chapter examines the theoretical frameworks related to M&A transactions, focusing on the drivers, importance, and risk factors associated with these deals. It also discusses the relevance of the German economy in the global context and the factors influencing M&A success, including geographic scope, industry relatedness, and other drivers.
- Chapter 3: Methodology of the M&A Study - This chapter details the methodology employed in the study, particularly the event study approach. The chapter explains the time series analysis used for estimating expected returns and the calculation of cumulative abnormal returns. It also discusses the regression analysis conducted to assess the impact of different factors on M&A success.
- Chapter 4: Data and Sample Selection - This chapter describes the data used in the study, including the selection criteria for the sample of German M&A transactions. It provides information about the data sources, the time period covered, and the specific characteristics of the chosen deals.
- Chapter 5: Results and Analysis - This chapter presents the results of the study's analysis, focusing on the cumulative abnormal returns calculated for the sample of M&A deals. It examines the impact of various factors, such as geographic scope, industry relatedness, and acquirer characteristics, on M&A performance. The chapter provides detailed insights into the key findings and their implications.
- Chapter 6: Implications and Limitations of the Study - This chapter discusses the implications of the findings for both academic research and business practice. It also acknowledges the limitations of the study, including the specific data used, the time period covered, and the scope of the analysis.
Schlüsselwörter (Keywords)
The key concepts investigated in this study include M&A transactions, event study analysis, abnormal returns, geographic scope, industry relatedness, acquirer characteristics, German economy, and firm value. The study utilizes these keywords to understand the determinants of success in M&A deals and to analyze the impact of various factors on M&A performance in the German market.- Quote paper
- Carolin Schmitt (Author), 2019, Determinants of Success of M&A Transactions, Munich, GRIN Verlag, https://www.grin.com/document/540293
