University Researchers: M&As That Drive Efficiency Provide the Most Value

A study of mergers and acquisitions conducted by researchers at George Mason University and Iowa State University shows that companies get more value return from M&A deals that help drive efficiency, the Washington Business Journal reported Wednesday.

“What we heard over and over from executives and from financial institutions is buy an adjacent quantity, buy a capability you don’t have, buy a customer that you don’t have access to,” said Brett Josephson, an assistant professor of marketing at GMU’s Center for Government Contracting. “But we actually found the biggest bang for the buck was buying for efficiency, not buying for new access.”

Josephson said they studied more than 600 M&As and analyzed them against the movement of the companies’ share prices on and a day after a transaction’s announcement to determine which deals generated the most market return. They also interviewed federal contracting officials and corporate executives for the study.