Author:

Keywords:

mergers, acquisitions, deal completion, duration, G34, M10, Social Sciences, Economics, Business & Economics, 1117 Public Health and Health Services, 1402 Applied Economics, 1502 Banking, Finance and Investment, Finance, 3502 Banking, finance and investment, 3801 Applied economics, 3899 Other economics

Abstract:

Literature on mergers and acquisitions (M&As) performance and wealth effects is abundant. Yet, we know very little about the pre-completion stage, in particular about aspects such as the likelihood of deal closing and time to completion. Understanding the drivers of completion time is however important as prolonged deal duration is costly and postpones realizing synergy gains. In this article, we study the antecedents of deal duration for a sample of 1150 M&As between listed US companies during 1994–2011. Not surprisingly, deal complexity critically affects time to completion. Stock offers, deal hostility, mergers and larger deals are characterized by a lengthier acquisition duration. Strong and clear shareholder support accelerates deal completion, as does the likelihood of overpayment. Finally, experienced bidders succeed in more rapidly completing transactions, implying learning effects.