The perfect match: assortative matching in mergers and acquisitions

Guadalupe, Maria, Rappoport, Veronica ORCID: 0009-0007-3665-4304, Salanie, Bernard and Thomas, Catherine ORCID: 0000-0002-7783-9758 (2024) The perfect match: assortative matching in mergers and acquisitions. CEP Discussion Papers (CEPDP2057). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

We interpret M&A deals in Western Europe during the 2010s as the equilibrium of a matching model. Merger surplus arises from complementarities between multiple firm pre-merger characteristics. Large, productive firms prefer to merge with similarly productive but smaller partners, suggesting positive complementarity in productivities and negative cross complementarity between productivity and scale. We use post-merger data to show that estimated complementarities are strong predictors of merged firm performance. Our results inform the empirical relevance of different theories of mergers.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2024 The Author(s)
Divisions:	Management
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HG Finance
JEL classification:	G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
Date Deposited:	10 Feb 2025 16:27
Last Modified:	10 Feb 2025 16:27
URI:	http://eprints.lse.ac.uk/id/eprint/126749

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