The Common Determinants of M&A Success - What Factors Contribute to Deal Success?

The Common Determinants of M&A Success - What Fac...

In the wake of the credit crisis, the M&A market has been adversely affected by several factors. In addition to a lack of financing options, acquirers and sellers are grappling with the problem of making realistic valuations amid rapidly declining revenues and uncertain consumer and business demand. However, certain industries, such as the financial sector, experienced increasing activity and acquirers demonstrated an appetite for smaller deals and distressed assets. This changing and volatile economic environment, coupled with increased shareholder scrutiny, makes it crucial for companies to analyze the factors affecting M&A deal success.

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KPMG, in collaboration with University of Chicago Booth School of Business Professor, Steven Kaplan, analyzed the results of 311 global deals between 2007 and 2008, and helps companies understand the factors correlated with deal success in multiple market environments. In addition to commonly analyzed factors, such as financing options, this study looks at less frequently examined factors, such as deal rationale. The paper focuses on numerous deal characteristics such as the deal currency, P/E ratio of the acquirer and target, and how they are correlated with the success of a deal.

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