Corporate Sustainability and M&A Acquisition Premiums

Gimede Gigante, Ludovico Galli and Francesca Scarlini

Business Strategy and the Environment, 2025, vol. 34, issue 5, 5563-5575

Abstract: This research explores the relationship between Corporate Sustainability and acquisition premiums in Mergers and Acquisitions (M&A) processes, focusing on Environmental, Social, and Governance (ESG) performance. While environmental concerns have gained prominence, this study investigates the underexplored impact of target firms' ESG scores on M&A premiums. By examining 325 M&A transactions, the research uncovers a positive correlation between higher ESG scores and increased acquisition premiums, suggesting that target companies with strong sustainability profiles can command better negotiating power. The findings highlight that a high ESG rating enhances both the target's value and the acquiring firm's potential to realize synergies and improve economic performance. Additionally, the study examines whether the relationship between M&A premiums and ESG scores is stronger for acquirers with high Corporate Social Responsibility (CSR) standards.

Date: 2025
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