Do Synergies Exist in Related Acquisitions? A Meta-Analysis of Acquisition Studies

Abstract

Mergers and acquisitions (M&A) aim to increase the wealth of shareholders of the acquiring company, in particular by creating synergies. It is often assumed that relatedness is a source of synergies. Our study distinguishes between business, cultural, technological, and size relatedness. It discusses the reasons why these different forms of relatedness can lead to an acquisition success and we conduct a meta-analysis of 67 prior M&A studies. Results indicate that positive effects can be expected under specific conditions only and have a limited overall impact on acquisition success. A moderator analysis finds that synergies stemming from relatedness depend on industry-, country-, and investor-characteristics.

Symmetric and asymmetric effects of proximities. The case of M&A deals in Italy

“…Chatterjee, 1986;Sirower, 1997;Seth et al, 2000;Homberg et al, 2009). If these resources are shared or efficiently combined, related acquisitions can benefit from economies of scope and scale.…”

The variegated role of proximities in acquisitions by domestic and international companies in different phases of economic cycles

“…A typical purpose of M&A is to enhance performance of involved firms and increase benefits for shareholders (Tuch & O'Sullivan, ), but empirical evidence is inconclusive in the literature. We should underline the importance of relatedness as a source of synergies (see e.g., Homberg, Rost, & Osterloh, ). Furthermore, the intensity of M&A activity is changing over time as companies have different strategies and expectations in times of crisis and economic boom.…”

“…The economic geography literature distinguishes especially geographical and cognitive proximity (or industrial relatedness) in understanding effects on M&A (e.g., Rodrıguez‐Pose & Zademach, ; Schildt & Laamanen, ; or Ellwanger & Boschma, ), but a more comprehensive proximity framework has been recently developed (Boschma, ; Boschma et al, ), which allows the measurement of more proximity dimensions. The economic literature points out business, cultural, technological, and size relatedness as key dimensions, which may lead to success or failure of acquisitions (Homberg et al, ).…”

Impact of Company’s Size on Takeover Success

“…Bruton et al in their research note that there is a higher probability of a successful takeover if the target company is smaller than the acquirer (Bruton et al, 1994). Homberg et al in the recent study came to the conclusion that it is necessary for the realization of planned synergies, from merger and acquisitions, that the acquirer is bigger than the target company Homberg et al, 2009). …”