Toward a complete definition of relatedness in merger and acquisition transactions

Alhenawi, Yasser; Stilwell, Martha L.

doi:10.1007/s11156-018-0752-3

Cited by 13 publications

(14 citation statements)

References 46 publications

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“…Further, Ushijima () finds diversified firms trade at a discount to focused firms while, in general, findings form Ahren and Harford () are related as it is more likely that a focused firm has stronger product market development relative to diverse firms . Directly or indirectly, these findings all reinforce points made by Alhenawi and Stilwell ().…”

Section: Literature Review and Motivationsupporting

confidence: 89%

“…There is considerable opportunity to address “relatedness” in the context of mergers and acquisitions, most often through acquirer–target lending relationships, as is thoroughly documented by Alhenawi and Stilwell () , . Additionally, Ahren and Harford () find the presence of merger waves in industries with stronger product markets, while also noting that poor proxies for relatedness can skew results when attempting to explain merger premiums.…”

Section: Literature Review and Motivationmentioning

confidence: 99%

“… Alhenawi and Stilwell () ultimately propose a multi‐dimensional approach that captures various dimensions of relatedness between acquirers and targets as being superior to models based on only one factor. …”

mentioning

confidence: 99%

“… “Relatedness” can take many forms and the greater ownership stake a bidder has in a target prior to an acquisition attempt, the greater the likelihood of takeover completion. This broader measure of relatedness is alluded to in Alhenawi and Stilwell (). This finding can be interpreted by the corresponding bank as risk‐reducing. …”

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confidence: 99%

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Bank lending to targets of active takeover attempts: The simultaneous choice of loan maturity, pricing, and security

Lallemand

2019

Rev Financ Econ

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I investigate bank loans to takeover targets considering the simultaneous decision of pricing, maturity, collateral, and covenants applying Generalized Method of Moments (GMM). Results are largely in line with the Agency Theory of Covenants (ATC) as pricing for new bank debt is lower given greater collateral and covenant protection, consistent with existing literature on public debt. However, poor performing targets demonstrate a positive relationship between pricing and covenants while bank loans to high performers are consistent with ATC predictions. Finally, loan terms tied to ex post observations of merger outcomes suggest banks possess some knowledge of merger outcomes in advance.

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Section: Literature Review and Motivationsupporting

confidence: 89%

Section: Literature Review and Motivationmentioning

confidence: 99%

mentioning

confidence: 99%

mentioning

confidence: 99%

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Bank lending to targets of active takeover attempts: The simultaneous choice of loan maturity, pricing, and security

Lallemand

2019

Rev Financ Econ

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“…Dias and Pereira (2017) found a direct link between knowledge transfer processes and performance. The relatedness of different sets of core competencies and their transferability has been largely overlooked in extant literature (Alhenawi and Stilwell, 2018). Tallman (2017) asks why theoretically sound expectations are often found to be lacking when subjected to empirical analysis.…”

Section: Introductionmentioning

confidence: 99%

Brazilian Natura & Co: creating cosmetic powerhouse. Empirical evidence of competence-based synergies in M&A processes

Čirjevskis

2020

ARLA

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PurposeThis paper aims to operationalize and to test the ARCTIC (A – Advantage, R – Relatedness, C – Complexity of Competence, T – Time of Integration, I – Implementation Plan, C – Cultural Fit) framework to assess the prerequisites of competence-based synergy in the acquisition process. The current research provides new analyses of recent acquisitions in the global beauty industry where the ARCTIC framework was satisfied and where the ARCTIC model was NOT satisfied by decisive factors to get the acquisition's synergies. It allows readers to contrast two case studies and grasp how the framework works in greater detail.Design/methodology/approachThe current research relies on an extensive archival search that included financial statements, annual reports, internal documents, industry publications and CEO statements to get at a micro-level understanding. This boosts research data and the operationalization of the ARCTIC framework.FindingsThe research identified four steps for investigating whether core competence transfer in an acquisition process would be a source of competence-based synergies. The incorporation of real options into the synergy valuation measures market value-added arising from M&A deals.Originality/valueThe current paper contributes to theoretical and practical issues of global M&As as part of the existing literature of international business and strategic management. The impact on reciprocal synergies of agency problems, external interaction between CEOs in M&A deals, corporate governance systems and an executive compensation theory are promising areas of future research.

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Examining the stock performance of acquirers where the acquirer or target hold patents

Kim

Oler

Sánchez

2020

Rev Quant Finan Acc

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Toward a complete definition of relatedness in merger and acquisition transactions

Cited by 13 publications

References 46 publications

Bank lending to targets of active takeover attempts: The simultaneous choice of loan maturity, pricing, and security

Bank lending to targets of active takeover attempts: The simultaneous choice of loan maturity, pricing, and security

Brazilian Natura & Co: creating cosmetic powerhouse. Empirical evidence of competence-based synergies in M&A processes

Examining the stock performance of acquirers where the acquirer or target hold patents

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