Developing a database of merger and acquisition transactions : towards insights into industry trends and drivers

Heathcote, Terry Wayne (2020-03)

Thesis (MEng)--Stellenbosch University, 2020.

Thesis

ENGLISH ABSTRACT: Mergers and Acquisitions (M&A) have experienced great fluctuations in activity throughout history, with the characteristics of deal trends changing constantly throughout time. Studies in the field focus greatly on the determinants of waves in merger activity, commonly testing proposed theories by empirical means. Few studies find a consensus on appropriate proxy use in determinant analyses and as a result, often find discord with prior findings in literature. Through a systematic quantitative literature review, aimed at identifying the traditionally studied M&A activity characteristics and drivers, lists of synthesized activity and determinant variables were established. Using these outputs as information requirements for envisioned analyses, a data warehouse was developed and populated with a sample of data gathered for domestic deals in the USA during the years 1998 to 2018, between listed acquirers and targets. Using the Database Life Cycle and Data Warehouse Architecture, an information storage facility, capable of driving M&A activity and determinant analysis, was developed. M&A trends were analyzed for the sample in terms of identified activity characteristics. Recent years show a steep increase in average deal value, giving way to an era of mega-mergers. The total value of the cash and stock as well as cash only payments has increased significantly from the stock only payment dominance in the late 1990’s and early 2000’s. In an evaluation of traditionally studied M&A determinants, a holistic approach is taken in considering a variety of proxies, while acknowledging established theoretical classifications. By applying methods in feature selection, a refined set of relevant determinant proxies were identified and subsequently analyzed using multiple linear regressions. The resulting models for annual deal volume and value proved to support both the Neoclassical and Macroeconomic theories of M&A, with little evidence supporting the Behavioral theory. The approach to determinant analysis proved to be effective in improving predictive ability for models, while initially considering a broad variety of determinant proxies recognized in literature. However, additional proxies for Firm-Level theories could be introduced in the future, using the same or a similar approach to analyses. This could provide a more comprehensive evaluation of determinants in the field.

AFRIKAANSE OPSOMMING: Samesmeltings en verkrygings (M&A) ervaar groot fluktuasies in aktiwiteit deur die loop van geskiedenis, met die kenmerke van transaksie tendense wat deurentyd verander. Studies in die veld fokus grootliks op die bepaalde faktore van veranderings in samesmeltingsaktiwiteit, en meestal word voorgestelde teorieë op empiriese wyse getoets. Selde vind studies ‘n ooreenstemming oor toepaslike volmaggebruik in determinant analise, en vind gevolglik dikwels onenigheid met vorige bevindings in die literatuur. Deur middel van ‘n sistematiese kwantitatiewe literatuuroorsig wat daarop gemik was om die tradisioneel bestudeerde M&A-aktiwiteitseienskappe en drywers te identifiseer, is lyste van gesintetiseerde aktiwiteit en determinantveranderlikes opgestel. Met behulp van hierdie uitsette as inligtingsvereistes vir beoogde ontledings, is ‘n datapakhuis ontwikkel en gevul met data, wat versamel is vir binnelandse ooreenkoms in die VSA gedurende die jare 1998 tot 2018, tussen genoteerde verkrygers en teikens. Met behulp van die databasis-lewensiklus en datapakhuisargitektuur, is ‘n inligtingsbergingsfasiliteit ontwikkel wat M&A-aktiwiteit en determinant-analise kan dryf. Die data was geanaliseer vir M&A-neigings in terme van geïdentifiseerde aktiwiteitseienskappe. Die afgelope jare toon ‘n skerp toename in die gemiddelde transaksiewaarde, wat plek maak vir ‘n era van mega-samesmeltings: die totale waarde van kontant en aandele sowel as slegs kontantbetalings het aansienlik afgewyk van die hoofsaaklike slegs aandele betaaling in die laat 1990‘s en vroe 2000‘s. In ‘n evaluering van tradisioneel bestudeerde M&A-determinante word ‘n holistiese benadering gevolg in die oorweging van verskillende gevolmagtigdes, terwyl erkenning gegee word aan gevestigde teoretiese klassifikasies. Deur metodes van funksie-seleksie toe te pas, is ‘n verfynde stel relevante determinant proxy‘s geïdentifiseer en daarna met behulp van veelvuldige lineêre regressies ontleed. Die gevolglike modelle vir jaarlikse kontrak volume en waarde bewys dat dit die Neoklassieke en Makro-ekonomiese teorieë van M&A ondersteun word, met min bewyse om die gedragsteorie te ondersteun. Die benadering tot determinantanalise blyk effektief te wees in die verbetering van die voorspellingsvermoë vir modelle, terwyl daar aanvanklik ‘n wye verskeidenheid determinante-gevolmagtigdes in die literatuur erken is. Maar, bykomende gevolmagtigdes vir Firmevlak-teorieë kan in die toekoms met behulp van dieselfde of ‘n soortgelyke benadering bekendgestel word. Dit kan ‘n meer volledige evaluering van determinante in die veld bied.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/107837
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