Using a sample of 45,283 firm year observations between 1993–2012, I examine the influence of different types of diversification and M&A accounting on firm value. I find that there are different explanations for earlier variations among documented discounts. I find different value effects for geographical and industrial diversification. These effects vary over time, with decreasing discounts for geographical diversification. Furthermore, I find different value effects of M&A accounting between industries. Controlling for firm fixed effects leads to insignificant results for most regressions, which indicates that underlying firm characteristics play an important role in the determination of the discount. Together, these findings explain earlier documented differences in the literature on the diversification discount.

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Acquisitions are considered to be the ultimate form of corporate growth in today’s increasingly complex and global business economy. There is a significant lack of research done in understanding the growth of I.T. SMEs by means of acquisitions. All previous research concerning acquisitions has focused mostly on large sized organizations, involved in cross national operations. SMEs do not compete in an international arena like multinational corporations, who have already inherited a culture of accommodating acquired firms and achieving synergy. Therefore the question here arises as to how SMEs pursue growth via acquisitions despite having limited resources and capabilities.   Purpose: The purpose of this thesis is to study acquisition growth strategy of two I.T. firms (SYSteam AB and Sigma AB) which have grown from SMEs to large firms by means of acquisitions.   Method: In order to fulfill the purpose of this study the authors conducted a qualitative case study of two I.T. firms. The authors used interview as the data collection method.   Results/conclusions: There are many different factors which lead a firm to pursue acquisitions. Increased market share, proximity to key customers and entrepreneurial nature of the founders were the main ones. Acquisition brings about numerous synergies and integration is a key to capitalizing upon these synergies. Acquisition induces entrepreneurial orientation and facilitates the emergence of acquisition capabilities within the acquiring firm.

Since it is a normal path for business to go for internationalization through merge and acquisition, there are always cases that end up with non expectable results. Therefore, there do exist huge risks in doing merge and acquisition. However, the probability of making a successful merge and acquisition could be improved by applying for appropriate strategic concerns. Finally, it is essential for managerial implications to find out the key factors of successful merge and acquisition. The thesis tried to find out factors that affect the process, and the outcome of merge and acquisition. By interviewing these key persons of W Company, we concluded with problems including culture, leadership, organization process, and human resources management that do have significant influence on the merge and acquisition progress. Furthermore, we try conclude and making hypotheses according to our interview. The purpose of our thesis was to discuss factors that affect the performance of merge and acquisition, such as corporate culture, leadership, operation process, and organization. According to the conclusions made from Narrative Method, it showed that these factors to some extent did have significant influence on the performance of post merge and acquisition. Therefore, anyone who wants to have splendid performance of merge and acquisition could not ignore these ones. According to the results, as we defined that whenever the performance ¡§turns from loss to profit,¡¨ it means that the merger is getting into success. Therefore, as the case is making huge profit many years after the action of merger, this is really a ¡§success¡¨ case. Therefore, the propositions and survey records are really precious and referral literatures for practical and academic.

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<p>Acquisitions are considered to be the ultimate form of corporate growth in today’s increasingly complex and global business economy. There is a significant lack of research done in understanding the growth of I.T. SMEs by means of acquisitions. All previous research concerning acquisitions has focused mostly on large sized organizations, involved in cross national operations. SMEs do not compete in an international arena like multinational corporations, who have already inherited a culture of accommodating acquired firms and achieving synergy. Therefore the question here arises as to how SMEs pursue growth via acquisitions despite having limited resources and capabilities.</p><p> </p><p><strong>Purpose:</strong> The purpose of this thesis is to study acquisition growth strategy of two I.T. firms (SYSteam AB and Sigma AB) which have grown from SMEs to large firms by means of acquisitions.</p><p> </p><p><strong>Method:</strong> In order to fulfill the purpose of this study the authors conducted a qualitative case study of two I.T. firms. The authors used interview as the data collection method.</p><p> </p><p><strong>Results/conclusions: </strong>There are many different factors which lead a firm to pursue acquisitions. Increased market share, proximity to key customers and entrepreneurial nature of the founders were the main ones. Acquisition brings about numerous synergies and integration is a key to capitalizing upon these synergies. Acquisition induces entrepreneurial orientation and facilitates the emergence of acquisition capabilities within the acquiring firm.</p><p> </p>

Mergers and acquisitions play an important role in international financial markets, which explains why this research area attracts of lot of attention from academics, bankers, and investors. Generally, in takeovers, two firms merge in order to achieve specific strategic and business objectives. The ultimate goal is often, but not always, the creation of shareholder value. In many cases, the creation of shareholder value is not the primary objective of the managers, however, which is one of the reasons why takeovers have been associated with the destruction of value in several existing studies. Instead, many M&A decisions are a function of managerial behaviour. In this thesis, I investigate the drivers of M&A activity, and consider both purely rational (neo-classical) and behavioural reasons as managers’ motivations for getting involved in M&A transactions. The thesis’s main body consists of three empirical studies that investigate how M&A activity is driven by macro-economic forces, managerial behaviour and board networks. Chapter 3 investigates whether merger waves are driven by macro-economic determinants and financial markets; Chapter 4 tests whether envy among CEOs has any explanatory power over the appearance of merger waves; Chapter 5 looks at whether board networks affect the relative merits of acquisitions and the probability of acquiring firms in “linked” industries. More specifically, Chapter 3 tests the extent to which US and UK merger waves are driven by macro-economic and financial market factors. Besides the analysis of domestic M&A activity, I also study the drivers of cross-border acquisitions between the UK and the US. I disentangle M&A activities according to how they are financed, and test whether managers follow market timing strategies when engaging in M&A transactions. I find evidence that domestic takeovers in the US and in the UK are highly correlated with the credit cycle and moderately correlated with the business cycle. I also test wave patterns in US and UK merger waves, and find that the merger waves in the two countries are significantly related to each other. Chapter 4 considers the view that irrational managerial behaviour could trigger UK merger waves. In particular, I assume that CEOs assess their own situation relative to those of their peers. If a CEO earns less than his peers, he becomes envious. Since it is established in the literature that firm size and executive compensation are positively correlated, CEOs have an incentive to engage in size-increasing mergers in order to decrease any compensation differential. Cross-sectional envy should therefore be considered as a potential explanation for merger waves. In an interdisciplinary approach, I develop a new measure for envy that is based on theories borrowed from the sociology area. My results from comprehensive tests with this new measure show that envy is unlikely to be an explanation for UK merger waves. Chapter 5 uses social networking theory to examine possible benefits for the acquirer from being well-connected. I assume that strong board networks are associated with better and faster access to information. Building on this rationale, I hypothesize that well-connected acquirers make better acquisitions due to reduced information asymmetries between them and the target. This chapter examines whether board interlocks between the acquirer and the target, existing prior to the acquisition, are associated with superior cumulative abnormal returns for the acquirer. Using centrality measures from social networking theory, I test whether firms that are well-connected make better acquisitions, as measured by the announcement returns of the acquirer. I find acquirer-target board interlocks to be significantly and positively associated with the acquirer’s cumulative abnormal returns. Centrality measures, however, turn out not to have any significant impact on the acquirer’s stock price reaction. Lastly, I show that acquirers are significantly more likely to acquire firms from industries with which they are “linked” via board members that have multiple directorships.

Main interest of this diploma thesis is a transaction known as leveraged acquisition. The goal is to provide detailed overview of these transactions starting from history and development of leveraged acquisitions, key market participants, acquisition financing, leveraged acquisition market and its current trends and analysis of a fictional transaction using advanced financial model. Due to the limited extent of the thesis not all aspects of debt financing and modeling could have been covered in the text.

Mergers and acquisitions has become a common thing in recent years. Assets change owners in hope of creating synergies and desirable outcomes. Human capital, i.e. the employees behind the numbers, is one asset that is often forgotten. It is therefore important to keep these key employees in the organisation post-acquisition in order to gain or retain competitive advantages and avoid unwelcome surprises. The aim of the study is to identify how Swedish medtech companies identifies key employees during a due diligence and how they retain them afterwards. We chose a qualitative approach for the study and have therefore conducted our interviews in a semi-structured manner. The study uses competence- and resource based theory to identify key employees and how to use them as a resource to gain a competitive advantage. Our result is that human capital is not a factor that can sustain a competitive advantage since it can be transferred via mergers and acquisitions. On the other hand, the competence based view can be used to maximize the resources in form of human capital. When a company is acquired, employees start integrating in the new organisation. The study uses onboarding theory to identify key aspects in how to acclimatise key employees. A conceptual model is eventually presented with our findings where key employees are identified by way of references, the former board of directors, statistics, meetings and industrial knowledge. The HR-department does generally gets involved late in the due diligence process, something that our respondents consider a potential problem. In post-acquisition, during the onboarding process, key factors are; obtaining information about the new culture, role clarification and new challenges to keep key employees in the new organisation. Keywords: Human Capital, mergers &amp; acquisitions, medtech, onboarding, key employee retention.

This thesis aims to examine whether a merger arbitrage strategy is able to generate market neutral alpha in the Nordic region. Similar studies of merger arbitrage strategies in both the US and Australian market find market neutral alpha. To investigate the viability of such a strategy, we developed a “Merger arbitrage portfolio” which invests in 55 deals during 2003-2017 in the Nordic equity capital market. Our findings provide strong support that a merger arbitrage strategy is market neutral, even in times of financial turmoil. An excess return is recorded, however, when estimating the portfolio with the Market Model we find no statistically significant alpha. The results are affected by large outliers. We conclude that our version of the merger arbitrage strategy is not an optimal investment in terms of its Sharpe Ratio, compared to an index using a similar strategy and the stock market.