Review of Managerial Science

, Volume 3, Issue 2, pp 75–116

Do synergies exist in related acquisitions? A meta-analysis of acquisition studies

Original Paper


Mergers and acquisitions (M&A) aim to increase the wealth of shareholders of the acquiring company, in particular by creating synergies. It is often assumed that relatedness is a source of synergies. Our study distinguishes between business, cultural, technological, and size relatedness. It discusses the reasons why these different forms of relatedness can lead to an acquisition success and we conduct a meta-analysis of 67 prior M&A studies. Results indicate that positive effects can be expected under specific conditions only and have a limited overall impact on acquisition success. A moderator analysis finds that synergies stemming from relatedness depend on industry-, country-, and investor-characteristics.


Mergers and acquisitions Meta-analysis Business relatedness Size relatedness Technological relatedness Cultural relatedness Synergies 

JEL Classification

G34 M19 


  1. Ahuja G, Katila R (2001) Technological acquisitions and the innovation performance of acquiring firms: a logitudinal study. Strateg Manag J 22:197–220. doi:10.1002/smj.157 CrossRefGoogle Scholar
  2. Andrade G (1999) Do appearances matter? The impact of EPS accretion and dilution on stock prices. or doi: 10.2139/ssrn.10.2139/ssrn.172868
  3. Baysinger B, Hoskisson RE (1989) Diversification strategy and R&D intensity in multiproduct firms. Acad Manag J 32:310–332. doi:10.2307/256364 CrossRefGoogle Scholar
  4. Bebchuk L, Hart O (2001) Takeover bids vs proxy fights in contests for corporate control. Harvard Law School, John M. Olin Center for Law, Economics and Business, Discussion paper series 336Google Scholar
  5. Berkovitch E, Khanna N (1991) A theory of acquisition markets: mergers versus tender offers, and golden parachutes. Rev Financ Stud 4(1):149–174CrossRefGoogle Scholar
  6. Bettis RA, Hall WK (1982) Diversification strategy, accounting determined risk, and accounting determined return. Acad Manag J 25:254–264. doi:10.2307/255989 CrossRefGoogle Scholar
  7. Borenstein M et al. (2007) Comprehensive meta analysis (version 2)Google Scholar
  8. Brown S, Warner J (1980) Measuring security price performance. J Financ Econ 8:205–257. doi:10.1016/0304-405X(80)90002-1 CrossRefGoogle Scholar
  9. Bruner RF (2002) Does M&A pay? A survey of evidence for the decision maker. J Appl Financ 12:48–68Google Scholar
  10. Bruner RF (2005) Deals from hell: M&A lessons that rise above the ashes. Wiley, HobokenGoogle Scholar
  11. Bruton GD, Oviatt BM, White MA (1994) Performance of acquisitions of distressed firms. Acad Manag J 37:972–989. doi:10.2307/256607 CrossRefGoogle Scholar
  12. Buono AF, Bowditch JL, Lewis JW (1985) When cultures collide: an anatomy of a merger. Hum Relat 38:477–500. doi:10.1177/001872678503800506 CrossRefGoogle Scholar
  13. Capron L, Mitchell W (2000) Internal versus external knowledge sourcing: evidence from telecom operators in Europe. Working paper, INSEADGoogle Scholar
  14. Cassiman B et al (2005) The impact of M&A on the R&D process: an empirical analysis of the role of technological- and market-relatedness. Res Policy 34:195–220. doi:10.1016/j.respol.2005.01.002 CrossRefGoogle Scholar
  15. Chakrabarti AK (1990) Organizational factors in post-acquisition performance. IEEE Trans Eng Manag 37:259–268. doi:10.1109/17.62321 CrossRefGoogle Scholar
  16. Chatterjee S (1986) Types of synergy and economic value: the impact of acquisitions on merging and rival firms. Strateg Manag J 7:119–139. doi:10.1002/smj.4250070203 CrossRefGoogle Scholar
  17. Chatterjee A, Hambrick DC (2007) It’s all about me: narcissistic chief executive officers and their effects on company strategy and performance. Adm Sci Q 52:352–386Google Scholar
  18. Chatterjee S, Wernerfelt B (1991) The link between resources and type of diversification: theory and evidence. Strateg Manag J 12:33–48. doi:10.1002/smj.4250120104 CrossRefGoogle Scholar
  19. Chatterjee S et al (1992) Cultural differences and shareholder value in related mergers: linking equity and human capital. Strateg Manag J 13:319–334. doi:10.1002/smj.4250130502 CrossRefGoogle Scholar
  20. Cloodt M, Hagedoorn J, Van Kranenburg H (2006) Mergers and acquisitions: their effect on the innovative performance of companies in high-tech industries. Res Policy 35:642–654. doi:10.1016/j.respol.2006.02.007 CrossRefGoogle Scholar
  21. Cohen WL, Levinthal DM (1990) Absorptive capacity: a new perspective on learning and innovation. Adm Sci Q 35:128–152. doi:10.2307/2393553 CrossRefGoogle Scholar
  22. Dalton DR et al (2003) Meta-analysis of financial performance and equity: Fusion or confusion? Acad Manag J 46:13–26CrossRefGoogle Scholar
  23. Datta DK (1991) Organizational fit and acquisition performance: effects of post-acquisition integration. Strateg Manag J 12:281–297. doi:10.1002/smj.4250120404 CrossRefGoogle Scholar
  24. Datta D, Rajagopalan N, Rasheed AMA (1991) Diversification and performance: critical review and future directions. J Manag Stud 28(5):529–558CrossRefGoogle Scholar
  25. Datta DK, Pinches GE, Narayanan VK (1992) Factors influencing wealth creation from mergers and acquisitions: a meta-analysis. Strateg Manag J 13:67–84. doi:10.1002/smj.4250130106 CrossRefGoogle Scholar
  26. Davis PS et al (1992) Business unit relatedness and performance: a look at the pulp and paper industry. Strateg Manag J 13:349–361. doi:10.1002/smj.4250130504 CrossRefGoogle Scholar
  27. Doukas JA, Petmezas D (2007) Acquisitions, overconfident managers and self-attribution bias. Eur Financ Manag 13:531–577. doi:10.1111/j.1468-036X.2007.00371.x CrossRefGoogle Scholar
  28. Eisend M (2004) Metaanalyse. Einführung und kritische Diskussion. Betriebswirtschaftliche Reihe, Fachbereich Wirtschaftswissenschaft der Freien Universität Berlin, p 8Google Scholar
  29. Ficery K, Herd T, Pursche B (2007) Where has all the synergy gone? The M&A puzzle. J Bus Strateg 28:29–35. doi:10.1108/02756660710820802 CrossRefGoogle Scholar
  30. Finkelstein S, Haleblian J (2002) Understanding acquisition performance: the role of transfer effects. Organ Sci 13:36–47. doi:10.1287/orsc. CrossRefGoogle Scholar
  31. Flanagan D (1996) Announcement of purely related and purely unrelated mergers and shareholder returns: reconciling the relatedness paradox. J Manag 22:823–835. doi:10.1177/014920639602200602 CrossRefGoogle Scholar
  32. Flanagan D, O’Shaugnessy KC (2003) Core-related acquisitions, multiple bidders and tender offer premiums. J Bus Res 56:573–585. doi:10.1016/S0148-2963(01)00269-7 CrossRefGoogle Scholar
  33. Fluck Z, Lynch AW (1999) Why do firms merge and then divest? a theory of financial synergy. J Bus 72:319–346. doi:10.1086/209617 CrossRefGoogle Scholar
  34. Fuller K, Netter J, Stegemoller M (2002) What do returns to acquiring firms tell us? evidence from firms that make many acquisitions. J Financ 57:1763–1793. doi:10.1111/1540-6261.00477 CrossRefGoogle Scholar
  35. Gugler K et al (2003) The effects of mergers: an international comparison. Int J Ind Organ 21:625–653. doi:10.1016/S0167-7187(02)00107-8 CrossRefGoogle Scholar
  36. Hagedoorn J, Duysters G (2002) The effect of mergers and acquisitions on the technological performance of companies in a high-tech environment. Technol Anal Strateg Manag 14:67–85. doi:10.1080/09537320220125892 CrossRefGoogle Scholar
  37. Hall BH, Jaffe A, Trajtenberg M (2001) The NBER patent citations data file: lessons, insights and methodological tools, Working paper no. 8498, NBERGoogle Scholar
  38. Hambrick D, Cannella A (1993) Relative standing: a framework for understanding departures of acquired executives. Acad Manag J 36:733–762. doi:10.2307/256757 CrossRefGoogle Scholar
  39. Harrison JS, Hall EH, Nargundkar (1993) Resource allocation as an outcropping of strategic consistency: performance implications. Acad Manag J 36:1026–1051. doi:10.2307/256644 CrossRefGoogle Scholar
  40. Hayward MLA, Hambrick DC (1997) Explaining the premiums paid for large acquisitions: evidence of CEO hubris. Adm Sci Q 42:103–127. doi:10.2307/2393810 CrossRefGoogle Scholar
  41. Healy PM, Palepu KG, Ruback RS (1997) Which takeovers are profitable? Strategic or financial? Sloan Bus Rev 38:45–57Google Scholar
  42. Heeley MB, King DR, Covin JG (2006) Effects of firm R&D investment and environment on acquisition likelihood. J Manag Stud 43:1514–1535. doi:10.1111/j.1467-6486.2006.00636.x CrossRefGoogle Scholar
  43. Hitt MA et al (1991) Effects of acquisitions on R&D inputs and outputs. Acad Manag J 34:693–706. doi:10.2307/256412 CrossRefGoogle Scholar
  44. Hitt MA et al (1996) The market for corporate control and firm innovation. Acad Manag J 39:1084–1119. doi:10.2307/256993 CrossRefGoogle Scholar
  45. Hofstede G (1980) Culture’s consequences: international differences in work-related values. Sage Publications, Berverly HillsGoogle Scholar
  46. Hofstede G (2001) Culture’s consequences—comparing values, behaviors. Institutions and Organizations across Nations, Thousand OaksGoogle Scholar
  47. Hunter JE, Schmidt FL (2004) Methods of meta-analysis: correcting error and bias in research findings. Sage Thousand Oaks, LondonGoogle Scholar
  48. Jansen SA (2002) Die 7 K’s des Merger Managements. Zeitschrift für Organisation 71(1):6–13Google Scholar
  49. Jensen MC, Ruback RS (1983) The market for corporate control: the scientific evidence. J Financ Econ 11(1):5–50CrossRefGoogle Scholar
  50. Kahnemann D, Tversky A (1986) Rational choice and the framing of decisions. J Bus 59:251–278. doi:10.1086/296367 CrossRefGoogle Scholar
  51. Kiechel WI (2007) Private equity’s long view. Harv Bus Rev 85:18–19Google Scholar
  52. King DR et al (2004) Meta-analyses of post-acquisition performance: indications of unidentified moderators. Strateg Manag J 25:187–200. doi:10.1002/smj.371 CrossRefGoogle Scholar
  53. Kogut B, Singh H (1988) The effect of national culture on the choice of entry mode. J Int Bus Stud 19:411–432. doi:10.1057/palgrave.jibs.8490394 CrossRefGoogle Scholar
  54. Köppen J, Knyphausen-Aufseß DZ (2004) Akquisitionsprämien und Lebensdauer von Synergien entscheiden über den Erfolg eines Mergers. M&. Rev 5:467–475Google Scholar
  55. Kothari SP, Warner JB (2004) Econometrics of event studies.
  56. Krishnan HA, Hitt MA, Park D (2007) Acquisition premiums, subsequent workforce reductions and post-acquisition performance. J Manag Stud 44:709–732. doi:10.1111/j.1467-6486.2006.00672.x CrossRefGoogle Scholar
  57. Kumar MS (1985) Growth, acquisition activity and firm size: evidence from the United Kingdom. J Ind Econ 33:327–338. doi:10.2307/2098540 CrossRefGoogle Scholar
  58. Kürsten W (2008) Synergies, shareholder value and exchange ratios in ‘‘value-creating’’ mergers: why shareholders should doubt management’s pre-merger promises. Manag Financ 34:252–261. doi:10.1108/03074350810849288 Google Scholar
  59. Kusewitt JB (1985) An exploratory study of strategic acquisition factors relating to performance. Strateg Manag J 6:151–169. doi:10.1002/smj.4250060205 CrossRefGoogle Scholar
  60. Laincz CA, Rodrigues ASD (2005) A theoretical foundation for understanding firm size distributions and Gibrat’s law. Discussion paper, University of York, EnglandGoogle Scholar
  61. Larsson R, Finkelstein S (1999) Integrating strategic, organizational, and human resource perspectives on mergers and acquisitions: a case survey of synergy realization. Organ Sci 10:1–26. doi:10.1287/orsc.10.1.1 CrossRefGoogle Scholar
  62. Larsson R, Lubatkin MH (2001) Achieving acculturation in mergers and acquisitions: an international case survey. Hum Relat 54:1573–1607CrossRefGoogle Scholar
  63. Leland HE (2007) Financial synergies and the optimal scope of the firm: implications for mergers, spinoffs, and structured finance. J Financ 62:765–807. doi:10.1111/j.1540-6261.2007.01223.x CrossRefGoogle Scholar
  64. Limmack R, McGregor N (1995) Industrial relatedness, structural factors and bidder returns. Appl Financ Econ 5:179–190. doi:10.1080/758523005 CrossRefGoogle Scholar
  65. Lindenberg E, Ross MP (1999) To purchase or to pool: does it matter? J Appl Corp Financ 12:32–48. doi:10.1111/j.1745-6622.1999.tb00006.x CrossRefGoogle Scholar
  66. Lubatkin M (1987) Merger strategies and stockholder value. Strateg Manag J 8:39–53. doi:10.1002/smj.4250080105 CrossRefGoogle Scholar
  67. Lubatkin M, Srinivasan N (1997) Merger strategies and shareholder value during times of relaxed antitrust enforcement: the case of large mergers during the 1980’s. J Manag 23:59–81. doi:10.1177/014920639702300104 CrossRefGoogle Scholar
  68. MacKinlay CA (1997) Event studies in economics and finance. J Econ Lit 35:13–39Google Scholar
  69. Malmendier U, Tate G (2005) Does overconfidence affect corporate investment? CEO overconfidence measures revisited. Eur Financ Manag 11:649–659. doi:10.1111/j.1354-7798.2005.00302.x CrossRefGoogle Scholar
  70. Malmendier U, Tate G (2008) Who makes acquisitions? CEO overconfidence and the market’s reaction. J Financ Econ 89:20–43. doi:10.1016/j.jfineco.2007.07.002 CrossRefGoogle Scholar
  71. Markides CC, Williamson PJ (1994) Related diversification, core competences and corporate performance. Strateg Manag J 15:149–166CrossRefGoogle Scholar
  72. Miller DJ (2006) Technological diversity, related diversification, and firm performance. Strateg Manag J 27:601–619. doi:10.1002/smj.533 CrossRefGoogle Scholar
  73. Moeller SB, Schlingemann FP, Stulz RM (2004) Firm size and the gains from acquisitions. J Financ Econ 73:201–228. doi:10.1016/j.jfineco.2003.07.002 CrossRefGoogle Scholar
  74. Montgomery C, Singh H (1987) Corporate acquisition strategies and economic performance. Strateg Manag J 8:377–386. doi:10.1002/smj.4250080407 CrossRefGoogle Scholar
  75. Morck R, Shleifer A, Vishny RW (1990) Do managerial objectives drive bad acquisitions? J Financ 45:31–48. doi:10.2307/2328808 CrossRefGoogle Scholar
  76. Morosini P, Shane S, Singh H (1998) National cultural distance and cross-border acquisition performance. J Int Bus Stud 29:137–158. doi:10.1057/palgrave.jibs.8490029 CrossRefGoogle Scholar
  77. Mueller DC (1997) Merger policy in the united states: a reconsideration. Rev Ind Organ 12:655–685. doi:10.1023/A:1007797626160 CrossRefGoogle Scholar
  78. Müller-Stewens G, Lechner C (2003) Strategisches Management—Wie strategische Initiativen zum Wandel führen? Schäffer-Pöschel, StuttgartGoogle Scholar
  79. Orwin RG (1994) Evaluating coding decisions. In: Cooper HHedges LV (ed) The handbook of research synthesis. Russell Sage Foundation, New York, pp 139–162Google Scholar
  80. Palepu K (1985) Diversification strategy, profit performance and the entropy measure. Strateg Manag J 6:239–255. doi:10.1002/smj.4250060305 CrossRefGoogle Scholar
  81. Palich LE, Cardinal LB, Miller CC (2000) Curvilinearity in the diversification–performance linkage: an examination of over three decades of research. Strateg Manag J 21(2):155–174CrossRefGoogle Scholar
  82. Papadakis VM (2005) The role of broader context and the communication program in merger and acquisition implementation success. Manag Decis 43:236–255. doi:10.1108/00251740510581948 CrossRefGoogle Scholar
  83. Pennings JM, Barkema H, Douma S (1994) Organizational learning and diversification. Acad Manag J 37:608–640. doi:10.2307/256702 CrossRefGoogle Scholar
  84. Porter M (1985) Competitive advantage: creating and sustaining superior performance. Free Press, New YorkGoogle Scholar
  85. Prahalad CK, Bettis RA (1986) The dominant logic: a new linkage between diversity and performance. Strateg Manag J 7:485–501Google Scholar
  86. Puranam P, Srikanth K (2007) What they know vs what they do: how acquirers leverage technology in acquisitions. Strateg Manag J 28:805–825. doi:10.1002/smj.608 CrossRefGoogle Scholar
  87. Rappaport A (1986) Creating shareholder value: the new standard for business performance. Free Press, New YorkGoogle Scholar
  88. Ravenscraft DJ, Scherer FM (1989) The profitability of mergers. Int J Ind Organ 7:101–116. doi:10.1016/0167-7187(89)90048-9 CrossRefGoogle Scholar
  89. Robinson JR, Shane PB (1990) Acquisition accounting method and bid premia for target firms. Account Rev 65:25–48Google Scholar
  90. Roll R (1986) The hubris hypothesis of corporate takeovers. J Bus 59:197–216. doi:10.1086/296325 CrossRefGoogle Scholar
  91. Ronen S, Shenkar O (1985) Clustering countries on attitudinal dimensions: a review and synthesis. Acad Manag Rev 10(3):435–454CrossRefGoogle Scholar
  92. Rumelt R (1974) Strategy, structure, and economic performance. Harvard Business School Press, BostonGoogle Scholar
  93. Russo EJ, Schoemaker PJH (1990) Decision traps. Simon & Schuster Inc., New YorkGoogle Scholar
  94. Salter MS, Weinhold WA (1978) Diversification via acquisition: creating value. Harv Bus Rev 56:166–176Google Scholar
  95. Scanlon KP, Trifts JW, Pettway RH (1989) Impacts of relative size and industrial relatedness on returns to shareholders of acquiring firms. J Financ Res 12:103–112Google Scholar
  96. Schoenberg R (2006) Measuring performance of corporate acquisitions: an empirical comparison of alternative metrics. Br J Manag 17:361–370. doi:10.1111/j.1467-8551.2006.00488.x CrossRefGoogle Scholar
  97. Seth A (1990) Value creation in acquisitions: a re-examination of performance issues. Strateg Manag J 11:99–115. doi:10.1002/smj.4250110203 CrossRefGoogle Scholar
  98. Singh H, Montgomery C (1987) Corporate acquisition strategies and economic performance. Strateg Manag J 8:377–387. doi:10.1002/smj.4250080407 CrossRefGoogle Scholar
  99. Sirower M (2001) Der Synergieeffekt. FinanzBuch Verlag, MünchenGoogle Scholar
  100. Slangen AHL (2006) National cultural distance and initial foreign acquisition performance: the moderating effect of integration. J World Bus 41:161–170. doi:10.1016/j.jwb.2006.01.003 CrossRefGoogle Scholar
  101. Stahl GK, Voigt A (2008) Do cultural differences matter in merger and acquisitions? a tentative model and examination. Organ Sci 19:160–176. doi:10.1287/orsc.1070.0270 CrossRefGoogle Scholar
  102. Sudarsanam SP (1995) The essence of mergers and acquisitions. Prentice Hall, Hemel HempsteadGoogle Scholar
  103. Sudarsanam S, Holl P, Salami A (1996) Shareholder wealth gains in mergers: effect of synergy and ownership structure. J Bus Financ Account 23:673–695. doi:10.1111/j.1468-5957.1996.tb01148.x CrossRefGoogle Scholar
  104. Tosi HL et al (2000) How much does performance matter? A meta-analysis of CEO pay studies. J Manag 26:301–339. doi:10.1177/014920630002600207 CrossRefGoogle Scholar
  105. Traijtenberg M (1990) A penny for your quotes: patent citations and the value of inventions. RAND J Econ 20(4):172–187Google Scholar
  106. Tschöke K, Csanad D (2007) Der globale M&A-Markt im zweiten Quartal 2007. M&. Rev 17:380–386Google Scholar
  107. Tuch C, O’Sullivan N (2007) The impact of acquisitions on firm performance: a review of evidence. Int J Manag Rev 9:141–170. doi:10.1111/j.1468-2370.2007.00206.x CrossRefGoogle Scholar
  108. Vermeulen F, Barkema H (2001) Learning through acquisitions. Acad Manag J 44:457–476. doi:10.2307/3069364 CrossRefGoogle Scholar

Copyright information

© Springer-Verlag 2009

Authors and Affiliations

  1. 1.IOU Institute for Organization and Administrative Science, University of ZurichZurichSwitzerland
  2. 2.CREMA, Center for Research in Economics, Management and the ArtsZurichSwitzerland

Personalised recommendations