The effect of the method of payment on the success of mergers & acquisitions A quantitative research combined with a case study in a business ecosystem
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2022-07-14
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en
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Abstract
The total investments in M&A have reached unpresented levels in the past decades and this has a considerable impact on the global economy. Contradictory to the amount of investments in M&A’s, the majority of the M&A’s are not successful. An important deal characteristic related to M&A performance is found to be the method of payment in financing the M&A deal. This paper analysed abnormal returns of acquirers during three event windows, withing 29 countries and during the last 20 years, to investigate to what extend the method of payment influences the deal outcome in M&A’s for acquirers. The results show higher cumulative average abnormal returns for cash-paid M&A deals compared to stock-paid deals during an event window of 3 trading days (-1/+1) and 9 trading days (-1/+7) around the announcement date. In addition, the results show also higher cumulative average abnormal returns for mixed-paid M&A deals compared to stock-paid deals during an event window of 9 trading days (-1/+7) around the announcement date. Finally, the case study illustrates a successful alternative approach in the M&A business by demonstrating acquisitions in a business ecosystem.
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Faculteit der Managementwetenschappen