Seventh Annual Mergers and Acquisitions Research Centre Conference

Bayes Business School, MARC and ECGI

Seventh Annual Mergers and Acquisitions Research Centre Conference

  • 19 June 2023
  • London, UK

Bayes Business School - Mergers and Acquisitions Research Centre (MARC) and ECGI

2023 Seventh Annual Mergers and Acquisitions Research Centre Conference

The Seventh Mergers and Acquisitions Research Centre (MARC) Conference was held on 19 June 2023 at Bayes Business School, City, the University of London, in continued cooperation with the ECGI.

See here to view the conference report.

 Monday, 19 June 2023
08:30 - 18:00 BST | 09:30 - 19:00 CEST

Location
Bayes Business School, London

Organisers:

Scott Moeller (Bayes Business School)
Anh Tran (Bayes Business School)
Paolo Volpin (Bayes Business School, Drexel University and ECGI)

More details

 

ABOUT THE EVENT

 

Since 2016, the annual M&A Research Centre conference has brought together cutting-edge research and practice on M&A by leading professors and industry experts around the world. Topics span a broad array of issues related to M&A such as deal structure from financing to integration, activism, regulatory changes, domestic and cross-border transactions and corporate social responsibility among others. The conference was held in cooperation with the European Corporate Governance Institute (ECGI). We are honoured to have many world-leading academic experts in the field of M&A serving in our programme committee.

The MARC conference is among the most selective high-quality conferences in the field. The papers presented at our conference are at the forefront of knowledge and of high academic rigour, as evidenced by a high acceptance rate in the top academic journals in the field. As of January 2023, ten papers presented at the first three conferences (2016 to 2018) have been published in leading journals including Journal of Political Economy, Journal of Finance, Journal of Financial Economics,  Review of Financial Studies and Journal of Accounting Research.

Queries should be directed to: BayesMARC@city.ac.uk
Conference location: Bayes Business School, LG002 & LG003, Lower Ground Floor – 106 Bunhill Row, London EC1Y 8TZ
Learn more: Bayes Business School event page

Information

Address:
Bayes Business School, City, University of London, 106 Bunhill Row, London EC1Y 8TZ
Contact:
Admin
Bayes Business School, City, University of London

 Monday, 19 June 2023 | 08:30 BST (09:30 CEST)

08:30

Registration

Back to full programme

Scope, Scale, and Concentration: The 21st century firm

Time:
00:07h

Scope, Scale, and Concentration: The 21st century firm

Authors

Gerard Hoberg

University of Southern California - Marshall School of Business - Finance and Business Economics Department

Gordon M. Phillips

Dartmouth College - Tuck School of Business and NBER

 

Abstract

We provide evidence that over the past 30 years, U.S. firms have expanded theirscope of operations. Increases in scope and scale were achieved largely without increasing traditional operating segments. Scope expansion significantly increases valuation and is primarily realized through acquisitions and investment in R&D, but not through capital expenditures. We show that traditional concentration ratios do not capture this expansion of scope. Our findings point to a new type of firm that increases scope through related expansion, which is highly valued by the market.

Speakers

Discussants

Conference Documents

Back to full programme

Merger Waves and Innovation Cycles: Evidence from Patent Expirations

Time:
00:07h

Merger Waves and Innovation Cycles: Evidence from Patent Expirations

Authors

Matthew Denes

Carnegie Mellon University - Tepper School of Business

Ran Duchin

Boston College - Carroll School of Management

Jarrad Harford

University of Washington and ECGI

 

Abstract

We investigate the link between innovation cycles and aggregate merger activity using data on patent expirations. We focus on patents that expire due to term expirations, which mandatorily occur at a pre-specified date. We find strong clustering in industry patent expirations (“patent expiration waves”). These patent waves trigger industry merger waves with lower announcement returns and worse long-term performance for acquirers, but higher announcement returns and larger premiums for targets. Acquirers also experience declines in profit margins, cash holdings and investment opportunities, while cutting costs in the year prior to a merger. Overall, we put forth a link, unexplored in the literature, between merger waves and patenting activity.

Speakers

Discussants

Conference Documents

10:30

Morning Coffee Break

11:00
- 12:30

Session 2 | Chaired by

Speakers:
Back to full programme

Solving Serial Acquirer Puzzles

Time:
00:07h

Acquirer Types and M&A Puzzles

Authors

Antonio J. Macias

Baylor University

P. Raghavendra Rau

University of Cambridge

Aris Stouraitis

Hong Kong Baptist University (HKBU) - Department of Finance and Decision Sciences

 

Abstract

Using a novel typology of serial acquirers, we solve several puzzles documented in prior literature. We show that acquisitions by different types of acquirers are driven by different factors, they acquire different sizes of targets, and subsequent acquisitions by acquirers are predictable ex ante. Controlling for market anticipation, the most frequent serial acquirers do not earn declining returns as they continue acquiring, while less frequent acquirers do. Our methodology significantly enhances our understanding of acquisition dynamics, anticipation, and economic value adjustments. The methodology is likely to be relevant to topics related to event anticipation beyond those covered in this study.

 

Speakers

Discussants

Conference Documents

Back to full programme

The use of escrow contracts in acquisition agreements

Time:
00:07h

The use of escrow contracts in acquisition agreements

Sanjai Bhagat

University of Colorado at Boulder - Department of Finance

Sandy Klasa

University of Arizona - Department of Finance

Lubomir P. Litov

University of Oklahoma - Michael F. Price College of Business and University of Pennsylvania - Wharton Financial Institutions Center

Abstract

A large fraction of acquisition deals for private firm and subsidiary targets include an escrow contract giving the bidder the opportunity to lay claim on escrow account funds if subsequent to the acquisition the seller fails to meet specific acquisition agreement terms. The likelihood of using an escrow contract is higher when buyer or seller transaction risk is larger. Also, the use of escrow contracts (i) helps to reduce bidders’ due diligence costs, (ii) enables sellers to obtain a higher sale price, and (iii) raises the extent to which an acquisition leads to an increase in bidder firm shareholder value.

Speakers

Discussants

Conference Documents

12:30

Lunch

13:30
- 15:00

Session 3 | Chaired by

Speakers:

Keynote Speech: “What’s ‘the Deal’: What’s happened, what’s happening and what may happen - Market insights from the WTW M&A Barometer Survey

Speakers:
Back to full programme

Keynote Speech: “What’s ‘the Deal’: What’s happened, what’s happening and what may happen - Market insights from the WTW M&A Barometer Survey

Time:
00:07h

Speakers

Back to full programme

The Incentives of SPAC Sponsors

Time:
00:07h

The Incentives of SPAC Sponsors

Felix Feng

University of Washington - Michael G. Foster School of Business

Tom Nohel

Loyola University of Chicago

Xuan Tian

Tsinghua University - PBC School of Finance

Wenyu Wang

Indiana University - Kelley School of Business - Department of Finance

Yufeng Wu

University of Illinois at Urbana-Champaign - Department of Finance

 

Abstract

This paper quantitatively studies the incentives of the sponsors of Special PurposeAcquisition Companies (SPACs) and their impact on SPAC investor welfare. We estimate a structural model featuring the strategic interactions between sponsors, targets, and investors using a hand-collected dataset with rich information such as sponsor concessions, earnouts, redemptions, etc. Agency costs appear pervasive: the inter-quintile range of returns reaches 19% for deals sorted on the extent of agency conflict. Tying more of the sponsor’s promote to earnouts and improving information transparency each significantly improve investors’ welfare, while curtailing the issuance of warrants yields only modest improvement.

Speakers

Discussants

Conference Documents

15:00

Afternoon Coffee Break

Back to full programme

Tax Avoidance through Cross-Border Mergers and Acquisitions

Time:
00:07h

Tax Avoidance through Cross-Border Mergers and Acquisitions

Authors

Jean-Marie Meier

University of Texas at Dallas

Jake Smith

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics

 

Abstract:

We investigate 13,307 cross-border, tax-haven mergers and acquisitions (M&A) from 1990 to 2017, totaling $4.1 trillion in deal value, or about 30% of total cross-border M&A volume. $2.4 of the $4.1 trillion is beyond what is predicted based on a gravity model with economic fundamentals. Tax-haven M&A result in $30.7 billion in recurring annual tax avoidance. To illustrate the magnitude, for a US firm with no prior cross-border, tax-haven M&A history, buying an Irish firm worth 5% of its total assets would result in an expected decline in its eective tax rate of 3.32 percentage points. For identification, we use a change in US tax law in 2004. Following haven acquisitions,firms are more likely to relocate their headquarters to havens. Our results document that tax avoidance through havens is a significant determinant of cross-border M&A.

Speakers

Discussants

Conference Documents

Back to full programme

Beyond Culture: How does international migration affect cross-border mergers and acquisitions?

Time:
00:07h

Beyond Culture: How does international migration affect cross-border mergers and acquisitions?

Authors

Ning Gong

Deakin University

Micah S. Officer

Loyola Marymount University - Department of Finance

Hong Feng Zhang

Deakin University - Deakin Business School

 

Abstract

We show that a higher migrant stock from an acquiring country to a target country leads to greater deal frequency and dollar value in cross-border acquisitions after controlling for the differences in economic and financial development, regulatory environments, valuations, and cultural distance. Our results support the arguments that migration impacts cross-border deal activity by ameliorating the effect of cultural distance, facilitating post-merger integration, and mitigating information asymmetry between acquiring and target countries. Instrumental variables derived from the interactions of the push and pull factors of migrant flows mitigate endogeneity concerns in our study.

Speakers

Discussants

Conference Documents

18:00

Conference Close and Dinner (by invitation for presenters, discussants and session chairs)

Speakers

Presentations

Back to all presentations

Conference opening

Time:
08:55h

Speakers

Back to all presentations

Session 1 | Chaired by

Time:
09:00h
- 10:30h

Speakers

Back to all presentations

Scope, Scale, and Concentration: The 21st century firm

Time:
00:07h

Scope, Scale, and Concentration: The 21st century firm

Authors

Gerard Hoberg

University of Southern California - Marshall School of Business - Finance and Business Economics Department

Gordon M. Phillips

Dartmouth College - Tuck School of Business and NBER

 

Abstract

We provide evidence that over the past 30 years, U.S. firms have expanded theirscope of operations. Increases in scope and scale were achieved largely without increasing traditional operating segments. Scope expansion significantly increases valuation and is primarily realized through acquisitions and investment in R&D, but not through capital expenditures. We show that traditional concentration ratios do not capture this expansion of scope. Our findings point to a new type of firm that increases scope through related expansion, which is highly valued by the market.

Speakers

Discussants

Conference Documents

Merger Waves and Innovation Cycles: Evidence from Patent Expirations

Back to all presentations

Merger Waves and Innovation Cycles: Evidence from Patent Expirations

Time:
00:07h

Merger Waves and Innovation Cycles: Evidence from Patent Expirations

Authors

Matthew Denes

Carnegie Mellon University - Tepper School of Business

Ran Duchin

Boston College - Carroll School of Management

Jarrad Harford

University of Washington and ECGI

 

Abstract

We investigate the link between innovation cycles and aggregate merger activity using data on patent expirations. We focus on patents that expire due to term expirations, which mandatorily occur at a pre-specified date. We find strong clustering in industry patent expirations (“patent expiration waves”). These patent waves trigger industry merger waves with lower announcement returns and worse long-term performance for acquirers, but higher announcement returns and larger premiums for targets. Acquirers also experience declines in profit margins, cash holdings and investment opportunities, while cutting costs in the year prior to a merger. Overall, we put forth a link, unexplored in the literature, between merger waves and patenting activity.

Speakers

Discussants

Conference Documents

Back to all presentations

Session 2 | Chaired by

Time:
11:00h
- 12:30h

Speakers

Back to all presentations

Solving Serial Acquirer Puzzles

Time:
00:07h

Acquirer Types and M&A Puzzles

Authors

Antonio J. Macias

Baylor University

P. Raghavendra Rau

University of Cambridge

Aris Stouraitis

Hong Kong Baptist University (HKBU) - Department of Finance and Decision Sciences

 

Abstract

Using a novel typology of serial acquirers, we solve several puzzles documented in prior literature. We show that acquisitions by different types of acquirers are driven by different factors, they acquire different sizes of targets, and subsequent acquisitions by acquirers are predictable ex ante. Controlling for market anticipation, the most frequent serial acquirers do not earn declining returns as they continue acquiring, while less frequent acquirers do. Our methodology significantly enhances our understanding of acquisition dynamics, anticipation, and economic value adjustments. The methodology is likely to be relevant to topics related to event anticipation beyond those covered in this study.

 

Speakers

Discussants

Conference Documents

Back to all presentations

The use of escrow contracts in acquisition agreements

Time:
00:07h

The use of escrow contracts in acquisition agreements

Sanjai Bhagat

University of Colorado at Boulder - Department of Finance

Sandy Klasa

University of Arizona - Department of Finance

Lubomir P. Litov

University of Oklahoma - Michael F. Price College of Business and University of Pennsylvania - Wharton Financial Institutions Center

Abstract

A large fraction of acquisition deals for private firm and subsidiary targets include an escrow contract giving the bidder the opportunity to lay claim on escrow account funds if subsequent to the acquisition the seller fails to meet specific acquisition agreement terms. The likelihood of using an escrow contract is higher when buyer or seller transaction risk is larger. Also, the use of escrow contracts (i) helps to reduce bidders’ due diligence costs, (ii) enables sellers to obtain a higher sale price, and (iii) raises the extent to which an acquisition leads to an increase in bidder firm shareholder value.

Speakers

Discussants

Conference Documents

Back to all presentations

Session 3 | Chaired by

Time:
13:30h
- 15:00h

Speakers

Back to all presentations

Brief Introduction to the Keynote Speech

Time:
00:07h

Speakers

Keynote Speech: “What’s ‘the Deal’: What’s happened, what’s happening and what may happen - Market insights from the WTW M&A Barometer Survey

Back to all presentations

Keynote Speech: “What’s ‘the Deal’: What’s happened, what’s happening and what may happen - Market insights from the WTW M&A Barometer Survey

Time:
00:07h

Speakers

Back to all presentations

The Incentives of SPAC Sponsors

Time:
00:07h

The Incentives of SPAC Sponsors

Felix Feng

University of Washington - Michael G. Foster School of Business

Tom Nohel

Loyola University of Chicago

Xuan Tian

Tsinghua University - PBC School of Finance

Wenyu Wang

Indiana University - Kelley School of Business - Department of Finance

Yufeng Wu

University of Illinois at Urbana-Champaign - Department of Finance

 

Abstract

This paper quantitatively studies the incentives of the sponsors of Special PurposeAcquisition Companies (SPACs) and their impact on SPAC investor welfare. We estimate a structural model featuring the strategic interactions between sponsors, targets, and investors using a hand-collected dataset with rich information such as sponsor concessions, earnouts, redemptions, etc. Agency costs appear pervasive: the inter-quintile range of returns reaches 19% for deals sorted on the extent of agency conflict. Tying more of the sponsor’s promote to earnouts and improving information transparency each significantly improve investors’ welfare, while curtailing the issuance of warrants yields only modest improvement.

Speakers

Discussants

Conference Documents

Back to all presentations

Session 4 | Chaired by

Time:
15:30h
- 17:00h

Speakers

Back to all presentations

Tax Avoidance through Cross-Border Mergers and Acquisitions

Time:
00:07h

Tax Avoidance through Cross-Border Mergers and Acquisitions

Authors

Jean-Marie Meier

University of Texas at Dallas

Jake Smith

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics

 

Abstract:

We investigate 13,307 cross-border, tax-haven mergers and acquisitions (M&A) from 1990 to 2017, totaling $4.1 trillion in deal value, or about 30% of total cross-border M&A volume. $2.4 of the $4.1 trillion is beyond what is predicted based on a gravity model with economic fundamentals. Tax-haven M&A result in $30.7 billion in recurring annual tax avoidance. To illustrate the magnitude, for a US firm with no prior cross-border, tax-haven M&A history, buying an Irish firm worth 5% of its total assets would result in an expected decline in its eective tax rate of 3.32 percentage points. For identification, we use a change in US tax law in 2004. Following haven acquisitions,firms are more likely to relocate their headquarters to havens. Our results document that tax avoidance through havens is a significant determinant of cross-border M&A.

Speakers

Discussants

Conference Documents

Beyond Culture: How does international migration affect cross-border mergers and acquisitions?

Back to all presentations

Beyond Culture: How does international migration affect cross-border mergers and acquisitions?

Time:
00:07h

Beyond Culture: How does international migration affect cross-border mergers and acquisitions?

Authors

Ning Gong

Deakin University

Micah S. Officer

Loyola Marymount University - Department of Finance

Hong Feng Zhang

Deakin University - Deakin Business School

 

Abstract

We show that a higher migrant stock from an acquiring country to a target country leads to greater deal frequency and dollar value in cross-border acquisitions after controlling for the differences in economic and financial development, regulatory environments, valuations, and cultural distance. Our results support the arguments that migration impacts cross-border deal activity by ameliorating the effect of cultural distance, facilitating post-merger integration, and mitigating information asymmetry between acquiring and target countries. Instrumental variables derived from the interactions of the push and pull factors of migrant flows mitigate endogeneity concerns in our study.

Speakers

Discussants

Conference Documents

Back to all presentations

Closing Remarks

Time:
17:00h

Speakers