The Pre-Deal Phase of Mergers and Acquisitions: A Review and Research Agenda

Abstract

Despite the long-standing research interest in the pre-deal phase of mergers and acquisitions, many important questions remain unanswered. We review and synthesize the extensive but rather fragmented research on this topic area in the fields of management, finance, accounting, and economics. We organize our review according to six themes, that is, deal initiation, target selection, bidding and negotiation, valuation and financing, announcement, and closure, which represent the main categories of activities performed during the pre-deal phase. Our review shows that most of the existing research relies on a rather high-level, simplified, and static conception of the pre-deal phase. On the basis of our review, we put forward a research agenda that calls for a more granular examination of individual activities and decisions, a more comprehensive analysis of the interplay among the different actors involved in the pre-deal phase, a better understanding of the role of the temporal dynamics, and the extension of the theoretical base from variance-based to process-based theorizing.

Innovative start-ups and policy initiatives

“…This study illustrates the importance of market linkages for these firms, which already have strong technological linkages. By using IPO and trade sales as outcome measures, this study uncovers a hitherto scarcely investigated pre-deal process (Welch et al, 2019), and thereby provides a valuable understanding of the implications for the design of policy initiatives.…”

The post‐acquisition performance of cross‐border mergers and acquisitions conducted by Chinese firms in the high‐tech industries: Profitable or innovative?

“…Drawing on the extant literature on EMNC international acquisitions (e.g., Ai & Tan, 2020; Liu & Meyer, 2020) and on the process perspective of post‐acquisition performance (e.g., Haspeslagh & Jemison, 1991), we argue that M&As are not just a one‐off choice, but a process that spans pre‐acquisition due diligence, decision making, negotiation, and post‐acquisition integration (Welch, Pavicevic, Keil, & Laamanen, 2019). Despite the synergy potential of an acquisition (which can be measured by stock market reaction) being affected by pre‐acquisition factors such as strategic, organizational, and cultural fits (e.g., Larsson & Finkelstein, 1999), the value of M&As is created in their post‐acquisition phase; this is because the extent to which such potential is realized depends on how the acquiring and target firms transfer and integrate their respective resources and capabilities (Graebner, Heimeriks, Huy, & Vaara, 2017; Wang, Sørensen, & Moini, 2018).…”

“…The process perspective proposed by Jemison and Sitkin (1986) proclaims that M&As are not one‐off deals. The M&A process starts with pre‐deal actions—such as initiation, target selection, bidding, negotiation, valuation—and post‐deal ones—such as a learning and integration phase that involves a successful transfer of resources and capabilities (Haspeslagh & Jemison, 1991; Welch et al, 2019). Several of the challenges encountered in the post‐acquisition phrase are affected by the decisions made in the pre‐deal one.…”

Desempenho Da Aquisição Corporativa Entre Empresas Brasileiras Familiares E Não Familiares De Capital Aberto

“…Brasil. https://orcid.org/0000-0003-3389-9713 A s aquisições corporativas são uma importante estratégia empresarial (Pimenta & Porto, 2018;Welch, Pavićević, Keil & Laamanen, 2020), muitas vezes utilizadas como mecanismo externo de alinhamento entre os interesses dos administradores e dos shareholders (Jensen & Ruback, 1983;Allayannis, Lel & Miller, 2012;Akira, 2020;Peng, Anwar & Kang, 2020). Todavia, diversos pesquisadores que se dedicaram a investigar o desempenho das aquisições sob a ótica das empresas adquirentes relataram que os retornos para estas empresas e seus acionistas, tanto no curto quanto no longo prazo, em média, são nulos ou negativos e altamente voláteis (King, Dalton, Daily & Covin, 2004;Moeller, Schlingemann & Stulz, 2005;Cornett, Tanyeri & Tehranian, 2011;Leung, Tse & Westerholm, 2019).…”

“…As aquisições corporativas estão entre as decisões mais importantes que os executivos tomam e possuem um alto potencial de alteração da riqueza dos acionistas (Moeller et al, 2005;Leung et al, 2019). No entanto, apesar do aumento dos estudos sobre este tema nos últimos anos (Pimenta & Porto, 2018;Pessanha, Lopes, Calegario, Safadi & Bernardo, 2019), ainda é evidente a falta de consenso sobre os motivos que levam os executivos a envolverem as empresas em tais operações, e sobre se essa estratégia realmente cria valor aos acionistas (Pessanha et al, 2019;Akira, 2020;Welch et al, 2020).…”