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.
Monday, 19 June 2023
08:30 - 18:00 BST | 09:30 - 19:00 CEST
Location
Bayes Business School, London
Registration Fee
Free for Academics & Alumni
Fee for Non-Academics: £75.00
Organisers:
Scott Moeller (Bayes Business School)
Anh Tran (Bayes Business School)
Paolo Volpin (Bayes Business School, Drexel University and ECGI)
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.
Registration
Free registration for academics & Alumni
Registration fee is applicable for Non-Academics: £75.00
Registration link: https://estore.city.ac.uk/product-catalogue/conference-events/conferences/7th-annual-mergers-acquisitions-research-centre-conference
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
Monday, 19 June 2023 | 08:30 BST (09:30 CEST)
Registration
Conference opening
Speakers:
Session 1 | Chaired by
Speakers:
Scope, Scale, and Concentration: The 21st century firm
Speakers:
Discussant:
Scope, Scale, and Concentration: The 21st century firm
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
Speakers:
Discussant:
Merger Waves and Innovation Cycles: Evidence from Patent Expirations
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
Morning Coffee Break
Session 2 | Chaired by
Speakers:
Solving Serial Acquirer Puzzles
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
The use of escrow contracts in acquisition agreements
Speakers:
Discussant:
The use of escrow contracts in acquisition agreements
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
Lunch
Session 3 | Chaired by
Speakers:
Brief Introduction to the Keynote Speech
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:
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
The Incentives of SPAC Sponsors
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
Afternoon Coffee Break
Session 4 | Chaired by
Speakers:
Tax Avoidance through Cross-Border Mergers and Acquisitions
Speakers:
Discussant:
Tax Avoidance through Cross-Border Mergers and Acquisitions
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?
Speakers:
Discussant:
Beyond Culture: How does international migration affect cross-border mergers and acquisitions?
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
Closing Remarks
Speakers:
Conference Close and Dinner (by invitation for presenters, discussants and session chairs)
Speakers
Presentations
Conference opening
Conference opening
Speakers
Session 1 | Chaired by
Session 1 | Chaired by
Speakers
Scope, Scale, and Concentration: The 21st century firm
Scope, Scale, and Concentration: The 21st century firm
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
Merger Waves and Innovation Cycles: Evidence from Patent Expirations
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
Session 2 | Chaired by
Session 2 | Chaired by
Speakers
Solving Serial Acquirer Puzzles
Solving Serial Acquirer Puzzles
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
The use of escrow contracts in acquisition agreements
The use of escrow contracts in acquisition agreements
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
Session 3 | Chaired by
Session 3 | Chaired by
Speakers
Brief Introduction to the Keynote Speech
Brief Introduction to the Keynote Speech
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
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
The Incentives of SPAC Sponsors
The Incentives of SPAC Sponsors
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
Session 4 | Chaired by
Session 4 | Chaired by
Speakers
Tax Avoidance through Cross-Border Mergers and Acquisitions
Tax Avoidance through Cross-Border Mergers and Acquisitions
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?
Beyond Culture: How does international migration affect cross-border mergers and acquisitions?
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.