The Value of Access to Finance: Evidence from M&A
56 Pages Posted: 2 Nov 2014 Last revised: 4 Aug 2018
Date Written: July 30, 2018
We examine synergies in mergers and acquisitions generated by firms’ comparative advantages in access to bank finance. We find robust evidence that greater access to bank finance increases firms’ attractiveness as acquisition targets. Targets’ comparative advantage in bank finance improves bank credit supply and reduces financing costs for the merged firms. These effects are more pronounced for acquirers with greater frictions in accessing bank loans and acquirers with greater growth opportunities. Overall, this paper reveals that targets, not just acquirers, contribute to financial synergies in M&A.
Keywords: M&A, Access to finance, Financing synergy, Banking deregulation
JEL Classification: G21, G32, G34
Suggested Citation: Suggested Citation