Value creation in European M&A transactions

Abstract

The Mergers and Acquisitions market represents an important aspect on the corporate environment. Therefore it is not strange that one of the main concerns for acquirer’s shareholders has been whether takeovers create value. While plentiful research has been conducted on this topic, no consistent evidence has been obtained. This master thesis provides first an overview of the fundamentals and indicators related to the value creation on M&A transactions. The aim of this study is to extend previous research by introducing a new model to predict value creation. The method consists on a linear regression model that questions some previous research. The findings suggest that it is not possible to detach the random component of M&A transactions in respect to their value creation. In effect the results emphasize the importance of a deep study for each specific transaction and the role of the management in creating value after the acquisition. The model has been complimented with other widely recognized methods for measuring postEacquisition performance and the abnormal return has been taken as the best proxy to show this performance.