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Past Issue • Oct-Dec 2011

Life After M&As

Are M&As about empire-building or are they based on a rational motive? What is the fate of the acquired assets after M&As? This article, based on a research paper "Post-Merger Restructuring and the Boundaries of the Firm" by Professors Gordon Phillips, N R Prabhala, and Vojislav Maksimovic, all from the Robert H Smith School of Business, University of Maryland, explores these questions along with the implications of M&As on the existing assets of the acquirer. The research paper is forthcoming in the Journal of Financial Economics. Mergers and Growth Mergers are a fast way for firms to grow. Through mergers, firms can rapidly expand market presence, acquire new strategic capabilities, or deploy in-house talent to quickly exploit new business opportunities. Mergers are also one of the most significant investment decisions made by firms. The worldwide M&A volume for 2010 exceeded $2 trillion...

ABOUT THE AUTHORS

  • Feature 2_N R Prabhala

    R Prabhala

    Associate Professor of Finance at the Robert H Smith School of Business, University of Maryland and visiting scholar at the Indian School of Business (ISB).
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