Credit rating downgrade risk affects how companies make acquisition decisions. Companies facing downgrade risk tend to do fewer acquisitions. They are more careful in their approach, taking longer to complete deals, hiring better financial advisors, and choosing targets with lower risk. This cautious strategy leads to better long-term performance and reduces the risk of future downgrades. This trend is especially strong for investment-grade firms, like BBB-rated companies close to being downgraded. Overall, firms at risk of a credit rating downgrade conduct acquisitions more cautiously, resulting in fewer but more successful deals.