The Auto Club Group
Mergers & Acquisitions
Report

Mergers & Acquisitions

The Good, the Bad, and the Ugly (and How to Tell them Apart)

Richard Tortoriello, Temi Oyeniyi, David Pope, Paul Fruin and Ruben Falk
Standard & Poor's, 2016
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Editorial Rating

8

Qualities

  • Analytical
  • Innovative
  • Overview

Recommendation

Mergers and acquisitions continue to make headlines in the United States. Stakeholders in both the acquiring and the acquired firms anticipate robust returns from these deals. Indeed, the acquired companies capture considerable stock price premiums when the transactions close. However, in this incisive analysis, S&P Global Market Intelligence associates Richard Tortoriello, Temi Oyeniyi, David Pope, Paul Fruin and Ruben Falk find that most acquiring firms tend to underperform significantly in their industries over the first three postmerger years. getAbstract recommends this highly technical, yet insightful, report to investors interested in understanding the dynamics of M&A on shareholder returns.

Summary

When they announce M&A deals, executives of the acquiring company will often extol the sizable gains in shareholder returns that will result from the purchase of or the merger with the target firm. Shareholders expect to realize substantial rewards from cost savings and revenue growth through synergies, economies of scale and market advantages.

In 2016, an extensive study of Russell 3000 Index data ascertained some facts about M&A outcomes. The research analyzed the first three years of postdeal results of some 9,000...

About the Authors

Richard Tortoriello et al. are professionals at Quantamental Research, a unit of S&P Global Market Intelligence.

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