Large Wealth Creation in Mergers and Acquisitions
Eliezer M. Fich
Drexel University - Department of Finance
Drexel University, Finance Department
Micah S. Officer
Loyola Marymount University - Department of Finance and Computer Information Systems
March 12, 2012
AFA 2013 San Diego Meetings Paper
We examine completed M&A deals with large bidder shareholder dollar wealth gains at announcement. Our results show that large-gain acquisitions are (i) typically “bolt-on” deals that are small relative to the acquirer’s size; (ii) transaction-specific events (not firm- or CEO-specific events); (iii) enhanced by synergies from a strategic fit in the supply chain; (iv) executed by bidders with high valuation multiples and; (v) implemented when borrowing costs are low. Many of these findings, which differ from those in the existing literature, provide important insight into the factors associated with considerable wealth creation for acquirer shareholders in M&A deals.
Number of Pages in PDF File: 49
Keywords: Mergers and acquisitions, wealth creation
JEL Classification: G34, L25, E51working papers series
Date posted: March 13, 2012
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