The Effect of Ex Post Risks on Post-M&A Performance Efficiency

Abstract

This article undertakes an empirical analysis of M&A-related risks based on evidence from eight listed U.S. bank holding companies over the period 2000-10. The research model is designed as an inter-domain risk matrix encompassing idiosyncratic and systematic risks underlying horizontal and conglomerate M&A. Risk impact is measured by critical performance metrics at corporate and environmental levels in the pre-and post-M&A periods. It was found insignificant relationship between synergy and concentration and marginal priority of financial over operating synergy in the post-M&A realm. While systematic risk can be mitigated by horizontal M&A followed by majority ownership, its adverse effect is insurmountable for institutions resulted from conglomerate M&A.