Mergers and Acquisitions: a Survey of Motivations

In this paper, I review the literature on the motivations for corporate mergers and acquisitions. I first introduce the main definitions and some relevant empirical studies in the field. Secondly, I study the historical evolution of the mergers and acquisition activity in the United States, explaining the environment in which they took place. I then explain the theoretical motivations for mergers and acquisitions, focusing in rational and irrational behaviors. The controversy generated around this topic is due to the differences between managements' arguments for mergers and acquisitions and the real performance of this activity for acquirers. The main motivations and the relevant theoretical arguments and empirical results are addressed. Finally, I discuss my view about this particular process that has created so much literature in the last decades.