Why Must All Good Things Come to an End? The Performance of Multiple Acquirers

Abstract

We examine empirically the relative performance effects of single and multiple acquirers. We find little difference between them. However, we do find that for multiple acquirers short and long run performance declines significantly with each subsequent acquisition. We find that this pattern is robust to controlling for bid characteristics that are known to impact takeover performance. We test various hypotheses and find that the decline only occurs for acquirers whose first acquisitions are successful. For acquirers whose first acquisition is unsuccessful, the bid order effect is positive. These results are consistent with a hubris effect, mean reversion effect, or diminishing returns effect for successful first acquirers and with some learning effects for unsuccessful first acquirers.