The Role of Internal M&A Teams in Takeovers

This article provides insights into the inner workings of internal corporate M&A teams using survey evidence from sixty-five firms from Austria, Germany, and Switzerland. We find that internal teams create value, especially relative to external advisors, by directing transaction rationales, screening targets, and employing performance metrics to assess post-merger success. Teams emphasizing economic rationales as a merger motive are associated with higher returns than those teams more apt to consider behavioral motives. We consider several team characteristics and find that financial experience is the most persistent and significant attribute in explaining the outcomes across various deal stages. Another key result from our survey-based evidence is that latent M&A team factors explain ∼54% of the acquirer fixed effects in announcement return regressions.

Bidder motivation and long-term performance of UK mergers

Earlier studies reported that bidders significantly underperform in the long-term post-acquisition period, but a growing body of literature shows that bidders’ long-term underperformance is not an obvious phenomenon. Many theories exist regarding the motivation towards initiation of a corporate takeover by acquisition bidding. This study has examined three major motivations of corporate acquisitions (hostile, hubris, and synergy) separately and measured the market performance of bidding firm over a long-horizon period. Bidders and targets are identified from a sample of completed UK takeovers between the period 1990 and 1998 that accurately reflect a specific merger motive. The findings show that the performance in the post-acquisition period depends on the main driving force behind the acquisition. The conclusions presented in this paper add new evidence to the post-acquisition dilemma by postulating that the underlying motives behind the takeover is related to the performance of the bidder over the long-horizon