Does M&A Pay? (Chapter 3)

41 Pages Posted: 14 Aug 2003

See all articles by Robert F. Bruner

Robert F. Bruner

University of Virginia - Darden School of Business


Following the largest M&A wave in history, it is appropriate to assess the evidence on the profitability of this activity. One popular view is that merger activity is highly unprofitable. Does research sustain this view? This paper reflects on what it means for M&A to 'pay' and summarizes the evidence from 12 informal studies, 120 scientific studies from 1971 to 2003, and five surveys of the scientific evidence published in 1979, 1983, 1987, 1989, and 1992. This review comments on the several formal and informal research approaches and highlights findings for the broad activity as well as niches of special note. The mass of research suggests that target shareholders earn sizable positive market-returns, that bidders (with interesting exceptions) earn zero adjusted returns, and that bidders and targets combined earn positive adjusted returns. On balance, one should conclude that M&A does pay. But the broad dispersion of findings around a zero return to buyers suggests that executives should approach this activity with caution.

Keywords: Mergers and Acquisitions, Valuation, Corporate Finance

JEL Classification: G34, G30, G31, G32

Suggested Citation

Bruner, Robert F., Does M&A Pay? (Chapter 3). Available at SSRN: or

Robert F. Bruner (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-3823 (Phone)
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