Learning from Repetitive Acquisitions: Evidence from the Time between Deals
51 Pages Posted: 26 Mar 2008 Last revised: 2 Oct 2012
Date Written: July 18, 2012
Knowledge gleaned from previous acquisitions may confer valuation expertise and other benefits. But numerous acquisitions also entail costs, due to problems of incorporating diverse units into an ever larger firm. Such benefits and costs are not directly observable from outside the firm. This article proposes a simple model to infer their relative importance, using the time between successive deals. The data requirements are minimal and allow the use of all mergers and acquisitions during 1992–2009 (more than 300,000 deals). The results provide evidence of learning gains through repetitive acquisitions, especially under CEO continuity and when successive deals are more similar.
Keywords: Acquisitions program, Learning, Integration costs, Time between successive deals
JEL Classification: G32, G34
Suggested Citation: Suggested Citation