Do Mergers and Acquisitions Create Value?

The main objective of M&A is to create long-term shareholder value, gain a larger market share and achieve greater efficiency. It is broadly believed and reported that the majority of acquisitions are destructive of value. In this paper I want to use a new and original method, developed with the help of Prof. Richard Horwitz, to measure the creation of value. We are going to use financial statements values and metrics (Intangible assets, Revenues, Net Income and ROE) to study this variable. Analyzing a few specific M&A cases, I found that this method is a valid option to measure if a M&A deal is successful or unsuccessful. Focusing our attention on a broader number of M&A deals, I found that M&A deals are strictly correlated to an increase in revenue and net income. But we cannot draw the same conclusion regarding the correlation between intangible assets and ROE metric, leading us to the conclusion that M&A deals do not unequivocally create value.