Article Abstract:
One hundred and four tender offers between 1962 and 1979 were analyzed to develop a conceptual framework to determine the connection between economic value and diversification strategies in acquisitions, as well as to determine whether different acquisition methods are connected with varying degrees of value creation. Research results indicate that different sources of value creation are likely to develop in various types of acquisitions. Research results also indicate that value creation is dependent on the mixture of characteristics of two merging companies, not the separate characteristics of each firm. Additionally, research results indicate that differences in performance between unrelated and related diversification methods is dependent upon categorizing firms as following one method or the other.
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Article Abstract:
It has been hypothesized that mergers between strategically related firms will generate abnormal returns for the shareholders of the bidding firms. This hypothesis is refined by arguing that relatedness in itself is not sufficient for bidding firms to earn abnormal returns. Acquiring a related firm will only result in abnormal returns when bidding firms have private and uniquely synergistic cash flows with target firms, or have unexpected synergistic cash flows.
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Article Abstract:
Data from 32 professional merger and acquisition (M&A) managers was collected to develop a taxonomy of managerial objectives in M&As. Analysis of past academic research indicates that goals identified in the taxonomy and in academic literature overlap but the goals are not completely parallel. Current findings suggest that different kinds of M&As are characterized by various managerial objectives.
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