The perfect match: assortative matching in mergers and acquisitions

Maria Guadalupe, Veronica Rappoport, Bernard Salanié and Catherine Thomas

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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.

JEL-codes: G34 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2024-12-04
New Economics Papers: this item is included in nep-cfn, nep-com and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:126749

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