Beyond the shareholders: The impact of M&A on other stakeholders

In this chapter, I survey the literature on the impacts of M&A for stakeholders other than shareholders. When M&A deals occur, we typically expect a certain restructuring of activities to follow. It is hard to imagine situations in which rational acquirers can afford to pay a premium over the target’s standalone value and then leave everything as-is. Therefore, some reshaping of operations and finances of the combined firm will likely take place – a reshaping that can have real consequences for various parties and entities with which the firm interacts. Included in those parties are constituencies such as consumers, suppliers, creditors, employees, top management, the tax authority (i.e. public finances), the environment, as well as less obvious parties such as charities and politicians. In addition, there are also indirect effects of M&A on the economy through their impact on broader economic outcomes such as innovation, productivity, and investment, as well as the more direct impact on deal advisors and facilitators. Some of these stakeholder groups have received more attention from researchers than others. For instance, the literature on the effects of M&A on consumers is much more developed (also in the broader economics discipline) than studies on the effect of M&A deals on the environment. Collectively, though, this literature has reached a point at which a systematic review is needed.