Measuring Merger Effects with Revenue Data

We study how revenue productivity (TFPR) and markups evolve after mergers across the economy. In financial-statement data, targets cease to exist as reporting entities after a deal, so tracking the merged firm requires constructing the combined acquirer-target unit before the merger. We formalize the biases that arise without this correction and implement it across 3,759 horizontal mergers in Spain between 1997 and 2022. Revenue productivity rises by approximately 4% within eight years and markups by approximately 5% to 6%. The breakdown by industry reveals that revenue productivity gains are broad-based, while markup increases are concentrated. Most industries show modest markup effects of 3% or less, with the largest increases occurring in two industries accounting for a small share of deals, led by human health activities. We find that without the boundary correction, both estimated effects reverse sign. The results suggest that mergers tend to raise the revenue productivity of the combined firm across the board, consistent with operational improvements, while large markup increases are a feature of specific industries rather than a general consequence of consolidation.