Bank of Lithuania
Mergers and Acquisitions Over the Cycle – An Empirical Investigation
2024-01-09

Mergers and Acquisitions Over the Cycle – An Empirical Investigation

Mergers and Acquisitions Over the Cycle – An Empirical Investigation
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Using US firm-level data from 1985-2019, this paper investigates how the characteristics of matches between acquirers and targets of mergers and acquisitions (M&A) vary over the business cycle. We document several findings. (1) Acquirers are on average larger, more profitable, and in a stronger financial position than targets. (2) Targets are more innovative than acquirers, and (3) M&A targets during a recession have worse financial health but higher levels of innovation compared to M&A targets in booms. Our empirical evidence suggests that an economy may benefit from an economy may benefit from adjusting its antitrust stance over the business cycle.

Keywords: mergers, M&A, business cycle, R&D, productivity

JEL codes: E22, E32, G34

business cycle, productivity, R&D, mergers, M&A