The Role of Related Strategic Alliances Before M&As

42 Pages Posted: 14 May 2020

Date Written: March 13, 2020

Abstract

Based on M&A deals by companies from the biotechnology and pharmaceutical industry, I analyze the role of different types of prior ties between companies. I distinguish related alliances into direct and indirect alliances. Related alliances provide access to more information and can reduce transaction costs. The reduction of such costs can lead to a more successful target selection and a more efficient transaction process of the M&A deal because the time from announcement to completion can be reduced. This effect can be explained by trust-building, better access to private information, and certification through related alliances. However, in contrast to other studies, I do not find statistically significant evidence that supports the hypothesis that alliances increase the post-M&A performance and that alliances are associated with higher announcement returns.

Keywords: Mergers and Acquisitions, Strategic Alliances, Transaction and Information Costs

JEL Classification: G34, D74, D82

Suggested Citation

Brinster, Leonhard, The Role of Related Strategic Alliances Before M&As (March 13, 2020). Available at SSRN: https://ssrn.com/abstract=3511396 or http://dx.doi.org/10.2139/ssrn.3511396

Leonhard Brinster (Contact Author)

University of Hohenheim ( email )

Wollgrasweg 49
Stuttgart, 70599
Germany

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