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Decision-making from a risk assessment perspective for Corporate Mergers and Acquisitions

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Abstract

Corporate Mergers and Acquisitions (M\( { \& }\)As) are notoriously complex, and risk management is one of the essential aspects of the analysis process for decision-making on M\( { \& }\)A deals. Empirically, we see that some M\( { \& }\)A transactions are not successful in part because of the increased exposure to correlated sectors, suggesting that the merged entity possesses increased risk in the market. This motivates our research on risk evaluation processes for corporate M\( { \& }\)A deals. In this paper, a decision making scheme using a reasonable risk measure is introduced and surveyed. Numerical examples are presented.

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Authors and Affiliations

  1. LeBow College of Business, Drexel University, Philadelphia, PA, 19104, USA

    Jinwook Lee

  2. RUTCOR, Rutgers Business School, 100 Rockafeller Road, Piscataway, NJ, 08854, USA

    András Prékopa

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  1. Jinwook Lee
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  2. András Prékopa
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Correspondence to Jinwook Lee.

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Lee, J., Prékopa, A. Decision-making from a risk assessment perspective for Corporate Mergers and Acquisitions. Comput Manag Sci 12, 243–266 (2015). https://doi.org/10.1007/s10287-014-0221-y

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  • DOI: https://doi.org/10.1007/s10287-014-0221-y

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