What Goes Wrong in M&As? On the Long-Run Success Factors in M&As

This paper provides an overview of the academic literature on the market for corporate control, and focuses specifically on firms’ performance around and after a takeover. Despite the aggregate M&A market amounting to several trillions USD on an annual basis, acquiring firms often underperform relative to non-acquiring firms, especially in public takeovers. Although hundreds of academic studies have investigated the potential determinants of M&A success, the wide variety of performance measures and sample sizes complicates the drawing of accurate and unambiguous conclusions. In this light, our survey compiles the recent literature and aims to identify which factors robustly contribute to and which factors hurt long-run deal success. We identify that long-run deal performance is affected by key determinants such as serial acquisitions driven by CEO overconfidence, acquirer-target relatedness and complementarity, and shareholder intervention in the form of voting or activism.