Learning in Bargaining and Value Capturing in M&A

Sammanfattning: I aim to test whether serial acquirers are learning from their past acquisition experience and becoming better at bargaining to capture more wealth in an M&A transaction over their deal series. Using mergers and acquisitions data in U.S. from 1980 to 2011, I verify the positive relationship between value-capturing performance and acquisition experience. On average one prior acquisition experience of a public target can help a bidder capture additional 108.5 million dollar from a target in later acquisitions or secure extra 0.385% of synergy created. I provide evidence that serial acquirers are getting efficient in negotiation and able to bargain for a lower premium as M&A experience accumulates. I also test the rate of learning and find an inverted U-shape relationship. Such learning effect is also found to reside in CEOs of acquiring companies. However, their improving ability in value-capturing might develop from general managerial or daily activities, other than from past M&A experience.