Grow externally, but do your homework. The impact of pre-event operating performance on the transaction outcome



For centuries mergers and acquisitions (M&As) have been considered an essential part of strategy for external growth. As a way in which a company can grow at accelerating rate, not only do they allow to achieve the corporate goals more quickly than to develop the skills in‑house, but they also bring a competitive edge in entering new markets, or extending the existing product portfolio. Empirical evidence states that corporate acquisitions contribute to the one third of average corporate growth rate, compared to the other options like growth in the market segments of firm’s portfolio or market share performance with 60% and 4% respectively. Therefore, M&As can enable a company to respond to perceived opportunities in the marketplace more quickly. However not all companies are able to react and size the market opportunities with such agility. While some of the acquirers can be incredibly successful, the empirical studies report the success rate of corporate M&As to be only 30%. So, what differentiates a successful acquirer from an unsuccessful one?


Abnormal Return Market Reaction Share Price Event Window Cumulative Abnormal Return 
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© Springer Fachmedien Wiesbaden 2015

Authors and Affiliations

  1. 1.University of KasselKasselDeutschland

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