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Working Papers

 
 Title

Fishing in muddy waters: Mergers and acquisitions during uncertainty

 Authors

Gopalakrishnan, Balagopal; Jacob, Joshy; Srivastava, Jagriti

 Publication Date

26-Sep-2022

 Year

2022

  Publication Code

WP 2022-09-02

 Abstract

Using the COVID-19 pandemic as an exogenous shock, we examine whether firms engage in opportunistic mergers and acquisitions during uncertainty. Particularly, we analyze the inorganic growth strategies of acquiring firms faced with disproportionate pandemic-induced opportunities using a cross-country deal-level data. We find a significant increase in the deal completion propensity and deal size, and a decrease in the deal completion time for acquirers that are more amenable to remote working. The effect is more pronounced when both the acquirer and the target are amenable to remote working. Our findings indicate that amenable firms, which were initially reluctant to engage in opportunistic acquisitions, engaged aggressively in the subsequent quarters with an abatement in pandemic-induced uncertainty. The study provides novel insights into the behaviour of acquisitive firms during the pandemic.

 

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