Fishing in Muddy Waters: Mergers and Acquisitions During Uncertainty

56 Pages Posted: 5 Jan 2024

See all articles by Balagopal Gopalakrishnan

Balagopal Gopalakrishnan

Indian Institute of Management Ahmedabad

Joshy Jacob

Indian Institute of Management (IIM), Ahmedabad

Jagriti Srivastava

Indian Institute of Management Amritsar

Abstract

Using the COVID-19 pandemic as an exogenous shock, we examine the acquisitive behavior of firms during a period of heightened uncertainty. Particularly, we analyze the impact of work-from-home amenability of acquirers, which presented itself as a pandemic-induced opportunity and resilience factor for some firms, on deal characteristics using cross-country deal-level data. We find a significant increase in both deal completion propensity and deal size accompanied by a decline in the deal completion time for acquirers more amenable to remote work. The effect is more pronounced when both the acquirer and the target are more suitable for remote working. Our findings suggest that firms more adaptable to remote workflow, which were reluctant to engage in acquisitions at the onset of the pandemic, engaged in deals more actively in the subsequent quarters with a decline in uncertainty. The novel insights on the acquisitive behavior of firms during the pandemic contribute to a deeper understanding of industry shocks on merger activity.

Keywords: Mergers, Acquisitions, COVID-19, Remote working, Work from home

Suggested Citation

Gopalakrishnan, Balagopal and Jacob, Joshy and Srivastava, Jagriti, Fishing in Muddy Waters: Mergers and Acquisitions During Uncertainty. Available at SSRN: https://ssrn.com/abstract=4671342 or http://dx.doi.org/10.2139/ssrn.4671342

Balagopal Gopalakrishnan

Indian Institute of Management Ahmedabad ( email )

D-1508 IIM Old campus
Vastrapur
Ahmedabad, 380015
India

Joshy Jacob (Contact Author)

Indian Institute of Management (IIM), Ahmedabad ( email )

Vastrapur
Ahmedabad, Gujarat 380 015
India

Jagriti Srivastava

Indian Institute of Management Amritsar ( email )

Inside Government Polytechnic Campus
Polytechnic Road PO: Chheharta, G.T. Road
Amritsar, 143105
India

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