TITLE:
Optimizing the Timing of M&A Decisions—An Analysis of Pro- and Anticyclical M&A Behavior in Germany
AUTHORS:
Irmi Eisenbarth, Reinhard Meckl
KEYWORDS:
M&A, Optimal Timing, Anticyclical
JOURNAL NAME:
American Journal of Industrial and Business Management,
Vol.4 No.9,
September
25,
2014
ABSTRACT: If one looks at
the market for corporate control from a research perspective, it is especially
interesting to analyze whether the decision-makers in the companies take
advantage of phases with low asset prices to buy out other companies (behaving
anticyclically), or whether they tend to buy during phases with high asset
prices—buying procyclically. The aim of this article is to test whether there is
a correlation between a company’s M&A behavior and the situation in the
capital market. Whether M&A success can be seen as dependent on different
market valuations and whether differences in terms of the various factors which
influence pro- and anticyclical M&A transactions can be determined. The
analysis is done with regard to the development of the DAX, the German stock
exchange market index. 78 transactions by German purchasing companies during
the period 1998 to 2009 were analyzed. The results show that M&A behavior
is a procyclical phenomenon and that anticyclical transactions are more
successful than procyclical ones in the long term.