The Effect of Inorganic Growth Dependence on Acquisition Premium

Abstract

This study extends prior research on the relationship between dependence on inorganic growth and acquisition premium by including factors that represent the process of interaction between target firms and acquirers We examine our hypotheses through 128 merger and acquisition (M&A) deals within the high technology industry in North America The results firstly indicates that when acquirers depend on inorganic methods to spur growth they are likely to become irrational and close deals with a relatively high acquisition premium Secondly prior experience can facilitate an acquirer’s decisions on M&A deals even when they are rather stressed or under pressure Finally a target’s condition plays an essential role in influencing the final terms of the deal In sum we suggest that acquirers can obtain more favorable M&A deal terms when they simultaneously consider the effect of internal factors (i e rational decision making patterns) external factors (i e ideal target that is undervalued by both the market and the target itself) and interaction factors (i e negotiation and terms)

Date of Award	2016 Sept 7
Original language	English
Supervisor	Chiung-Hui Tseng (Supervisor)