A Study of Prior Board Recruitment Decisions for M\&A Deals When Shareholders Get to Vote

Abstract

When shareholders of a company involved in an M&A transaction are asked to vote on the terms of the proposed deal they may choose to vote against managements proposal. This study investigates whether M&A experience and timely appointments of individuals to management and board roles are likely to increase deal probability. Using a new data source, DEFM14A filings, our analysis shows that board member prior experience is associated with a 6.5% increase in deal probability. In addition we show that individuals in powerful combined board and stock holding positions have significant effect. Our new identification of historical board positions allows us to go beyond traditional measures of board performance based on affiliations such as joint board seats. Our richer characterization of board member experience allows us to investigate more nuanced measures of what it takes to get a deal past shareholders.

Keywords: M&A, networks, interlocking, board composition, Google page rank