The Impact of Macroeconomic Activity and Yield Valuation on Mergers and Acquisitions in Europe

Beschreibung

We examine the macroeconomic determinants of mergers and acquisitions (M&A) using panel data over 2006:Q1 - 2022:Q2 for 21 European Union (EU) countries. Across di§erent model speciÖcations we Önd that bond yields and past real GDP growth are robust quantitatively and statistically significant determinants of M&A even after controlling for ináation and short-term global financial uncertainty. Additionally, we investigate the effect of the earnings before interest, taxes, depreciation and amortization multiple as an additional explanatory variable. A crucial novelty of our study is that bond yields reduce M&A activity because other investors are shifting their portfolios out of bonds and into riskier assets such as equities. We denote this as a ìperverse valuation effectîmaking M&A more expensive. This interpretation and channel is unique to our study

Autor*in

Fabio E.G. Röhrer

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Mergers and Acquisitions Financial markets Macroeconomy European Union

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