Friday, April 8, 2016
The fact that most mergers aren't in fact value enhancers for stockholder's of the acquirer isn't exactly news to people who pay attention to these things. Sure, selling stockholders make out well. As they should. They typically receive a premium to sell their shares. But what about buyer's stockholders? Meh. Robert Bruner summarized a number of studies of the profitability of M&A activity and found:
The mass of research suggests that target shareholders earn sizable positive market-returns, that bidders (with interesting exceptions) earn zero adjusted returns, and that bidders and targets combined earn positive adjusted returns.
Over at Braid, where they play with data, they've recently posted a nice visualization of the same:
It's an interactive visual, so go on over to Braid (link) and play with it. It's really very interesting. And what else are you going to do on a Friday afternoon?