Performance Assessment of Mergers and Acquisitions: Evidence from Academic Field and Fieldwork

Corporate mergers and acquisitions (M&As) have been increasing popular during these decades. However, a majority of research show failure rate (40% - 80%) has not significantly changed. This “success paradox” triggers us to reflect on performance assessment of M&As: how the performance of M&As is defined and measured? What are the results using different measures or different samples? What are the evidences from fieldwork? Following these questions, we first make a comprehensive literature review and then conduct a questionnaire survey to Danish firms. A summary and comparison have been done on the performance measures and benchmarks adopted in M&A research field and the relevant empirical results. We find that the definitions of performance varied in terms of accounting, financial, operational and perceptual metrics. And performance assessment is sensitive to the definition of performance, methodology selected, benchmarks construct, sample used, and observation time horizon, which is the main reason for a vast body of controversial research findings. Besides, we also get some finding from questionnaire survey, which are reported in the paper.