Academic research into M&A can reveal some useful insights — along with a few surprises

The nuts and bolts of M&A can get lost amid discussions of hot sectors and trending regions. But academic researchers are increasingly digging into what it means to be an effective acquirer. What are they finding?

In 2016, deal activity fell from the all-time peak of 2015, when low interest rates and stable economic growth combined to cause an M&A bonanza. And yet, if you ask dealmakers, they will tell you that competition for assets continues to rise. In June 2016, the average price-to-EBITDA multiple had grown to 11.07x according to Bloomberg, the highest level since at least 2007, indicating that acquirers have had to pay more for their purchases.

In this hyper-competitive environment, insights into M&A strategy can be more valuable than ever. And such insights can be found in some unusual places. One potential fount of knowledge is the academic research community, which has become increasingly interested in the world of M&A as transaction activity has mushroomed in recent decades.

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Researchers have been probing areas such as “performance persistence” of acquirers (both corporate and private equity); how to evaluate the payoff of using different kinds of M&A advisors; and the relative advantages of buying early or late in an economic cycle. The Cass Business School’s M&A Research Centre at City, University of London and other academic institutions are making deals a popular subject of study.

The findings obtained by these researchers can provide valuable insights to M&A professionals. But do they match up with the real-world experience of deal advisors? What do dealmakers think about the academics’ results? In order to find out, we spoke with four industry veterans about three specific research results, as well as with a professor who co-wrote one of the papers. We hope that you enjoy the conversation, and find a few useful insights along the way.

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