Business, Management and Accounting
8 years ago

Acquiring private firms leads to higher returns for acquiring companies.

Advances in financial economics
Mergers and Target Transparency
Iftekhar Hasan, Jarl G. Kallberg, Crocker H. Liu, Xian Sun

Paper Summary

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The study looked at how the complexity of a company being acquired affects the returns for the acquiring company. They analyzed 1,538 acquisitions and found that acquiring private companies led to higher short-term returns. Acquiring the management along with the assets also increased returns. The results were consistent over several years after the acquisition. The type of payment (cash, stock, or a mix) didn't change the outcomes.