An approach to two-sided M&A fits based on a cross-efficiency evaluation with contrasting attitudes

Hai-Liu Shi, Ying-Ming Wang (), Sheng-Qun Chen and Yi-Xin Lan
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Hai-Liu Shi: Fuzhou University
Ying-Ming Wang: Fuzhou University
Sheng-Qun Chen: Fuzhou University
Yi-Xin Lan: Fuzhou University

Journal of the Operational Research Society, 2017, vol. 68, issue 1, 41-52

Abstract: Abstract Two-sided mergers and acquisitions (M&A) fits have been regarded as a critical step, which should always be taken by a bidder company when trying to identify suitable target companies prior to an M&A. This paper proposes an approach to two-sided M&A fits based on a cross-efficiency model with contrasting attitudes. In this approach, firstly, feasible M&A fits are screened using a preference function from an M&A fit matrix, according to the preferences of both the bidder companies and target companies in terms of efficiency and return to scale. Secondly, two-sided M&A fits are selected from a feasible M&A fit matrix, according to the value of cross-efficiency with contrasting attitudes. This allows for the existence of contrasting attitudes of peers toward an M&A fit, as opposed to the aggressive, benevolent or neutral cross-efficiency evaluation which consists of just one attitude (either aggressive, benevolent or indifferent). Finally, an illustrative example is given to explain the feasibility and validity of the two-sided M&A fit strategy.

Keywords: two-sided mergers and acquisitions (M&A) fits; data envelopment analysis; cross-efficiency evaluation with contrasting attitude; efficiency and RTS (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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DOI: 10.1057/s41274-016-0005-6

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