M&A Activity by Year: The BCG M&A Report Collection

The 2018 M&A Report: Synergies Take Center Stage

The 2017 M&A Report: The Technology Takeover

The 2016 M&A Report: Masters of the Corporate Portfolio

The 2015 M&A Report: Increasing Returns with M&A

The 2014 M&A Report: Don’t Miss the Exit

Winning at M&A in Emerging Markets: BRICs Versus Mortar? [2013]

Riding the Next Wave in M&A: Where Are the Opportunities to Create Value? [2011]

Seize the Opportunities in M&A: Accelerating Out of the Great Recession [2010]

The data set we used as the basis for the analyses in BCG’s M&A research (the “M&A database”) comprises approximately 926,000 M&A deals covering the period from January 1980 through June 2023. In assessing general market trends, we analyzed reported M&A transactions from 1990 through the first half of 2023. For the analysis of deal values and volumes, we excluded transactions marked as self-tenders, recapitalizations, exchange offers, repurchases, privatizations, and spinoffs.

In addition to using our proprietary data and analytics, we collected and collated financial data and relied on information from various data providers, including Refinitiv Eikon, Refinitiv DataStream, and S&P Capital IQ.

Short-Term Value Creation

Although analyzing different issues required the use of distinct samples, we employed the same econometric methodology to all return analyses.

To determine the “announcement return,” we derived the cumulative abnormal return (CAR), by taking the difference between the actual return on the acquirer’s stock (P_acq) and the return realized in the sector index (P_index) as an approximation for expected returns, starting three days before the announcement date (–3d) and ending three days after it (3d). (See Equation 1.)

EQUATION 1

Long-Term Value Creation

For M&A deals, we tracked the stock market performance of the acquirers or the sellers over periods of different length following the acquisition announcement. Note that we could not track the targets because, in most cases, they are delisted from the public-equity markets.

First, we measured the total shareholder return (TSR) generated by the acquirer or seller over a time period of length t. (See Equation 2.)


EQUATION 2



Second, we subtracted from the TSR the return made by a benchmark index over the same period, in order to find the relative total shareholder return (RTSR) generated by the acquirer or the seller—in other words, the return in excess of the benchmark return.1 (See Equation 3.)

EQUATION 3


Note that we could not include all deals in this analysis because, for some deals, the time elapsed since the announcement was too short to allow us to calculate the returns.

^{1 The benchmark indexes we applied are the relevant worldwide Refinitiv (formerly Thomson Reuters) indexes.}

We applied common-practice statistical significance tests to all of our quantitative results in this report. To assess whether means were statistically different from zero, we used one-sample t-tests; and where appropriate, we used two-sample t-tests to determine whether the difference between means was significantly different from zero—that is, whether two groups did in fact have different means.

Generally, for longer-term analyses (such as one- and two-year RTSR) and for the short-term analysis (that is, CAR), we used relative measures of size impact (such as deal value compared to the enterprise value of the acquirer) as well as absolute measures of size (such as deal value) to determine whether a transaction was sufficiently material to have had an impact on overall performance.