How Small Data Choices Reshape M&A Findings
Study every deal, not just the big public ones, and some textbook facts about mergers change.
Much of what we know about mergers and acquisitions comes from samples that quietly exclude most deals: private bidders, small targets, transactions without a disclosed value. This study asks what happens when you keep everything, analyzing a comprehensive sample of deals from 1992 through 2009.
The landscape looks different. Merger activity is far broader than the standard literature implies, which oversamples large deals between public firms. The famous finding that mergers come in waves weakens considerably once smaller and private firms enter the sample.
Perhaps most strikingly, acquirers gain in most takeovers, even as average acquirer returns declined roughly threefold over the sample period. Conclusions built on narrow samples do not always survive contact with the full population of deals.
The paper, which received the Mabry Award and was reprinted in a collected volume on mergers and acquisitions, has become a standard caution for empirical researchers: your screens are part of your findings.
The Takeaway
Sample screens are not neutral. With the full universe of deals, merger waves fade and most acquisitions look like gains for the buyer.