Keywords

M&A, mergers and acquisitions, strategic M&A's

Disciplines

Business | Business Analytics

Abstract

Global acquisitions were worth $6.5 billion in the first quarter of 2008, were down 44% from the previous quarter, and down 41% from the first quarter of 2007.1 But the value of strategic M&As dropped less, only 33%, while the number of deals rose 8%, and cross-border deals represented 38% of the total value of global M&As. Kroll argues that strategic M&As, while likely to experience some drop in volume in 2008 and until the credit crisis bottoms out, will withstand the pressures of financial markets much better than financial M&As. Strategic M&As are deals conducted by companies that want to integrate strategic and complementary additions to their firm’s existing competencies. Financial acquisitions are deals done by private equity or venture capital investors who are looking for portfolio picks that will bring a high return in a relatively short period of time. While the overall volume of M&A deals trended downward through 2007, strategic M&As took less of a hit and Asia was the only region that demonstrated an increase.2 In this article, we try to explain the reasons for this, including the current downturn in M&A activity, M&A trends today, success factors in financial M&As and then strategic M&As, and an update on IPO activity.

Original Citation

Sanchez, C., Goldberg, S. R. (2009). Strategic M&As: Stronger in tough times? The Journal of Corporate Accounting & Finance, 2009(January/February), 3-7. https://doi.org/10.1002/jcaf.20460

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