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The perfect match: assortative matching in mergers and acquisitions

Author

Listed:
  • Guadalupe, Maria
  • Rappoport, Veronica
  • Salanie, Bernard
  • Thomas, Catherine

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.

Suggested Citation

  • Guadalupe, Maria & Rappoport, Veronica & Salanie, Bernard & Thomas, Catherine, 2024. "The perfect match: assortative matching in mergers and acquisitions," LSE Research Online Documents on Economics 126749, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:126749
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    File URL: http://eprints.lse.ac.uk/126749/
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    References listed on IDEAS

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    4. Julian Birkinshaw & Henrik Bresman & Lars Håkanson, 2000. "Managing the Post‐acquisition Integration Process: How the Human Iintegration and Task Integration Processes Interact to Foster Value Creation," Journal of Management Studies, Wiley Blackwell, vol. 37(3), pages 395-425, May.
    5. Taco H. Reus & Bruce T. Lamont & Kimberly M. Ellis, 2016. "A darker side of knowledge transfer following international acquisitions," Strategic Management Journal, Wiley Blackwell, vol. 37(5), pages 932-944, May.
    6. Ashish Arora & Michelle Gittelman & Sarah Kaplan & John Lynch & Will Mitchell & Nicolaj Siggelkow & Denisa Mindruta & Mahka Moeen & Rajshree Agarwal, 2016. "A two-sided matching approach for partner selection and assessing complementarities in partners' attributes in inter-firm alliances," Strategic Management Journal, Wiley Blackwell, vol. 37(1), pages 206-231, January.
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    More about this item

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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