Attractive M&A Targets Part 1: What Do Buyers Look For?

This report from Cass Business School and Intralinks looks at the reason why some companies are more likely to become acquisition targets. The findings are based on a global sample of 33 952 public and private companies over the period 1992-2014. 

There are six statistically significant predictors that measures how likely it is for a company to become an acquisition target:

  1. Growth: Target companies have higher growth than non-targets
  2. Profitability: Private target companies are more profitable than private non-targets, whereas public target companies are less profitable than public non-targets
  3. Leverage: Private target companies are significantly more leveraged than private non-targets. Public companies with much lower leverage than the average are also most likely to become acquisition targets
  4. Size: Private target companies are significantly larger than private non-targets, whereas public targets are significantly smaller than public non-targets
  5. Liquidity: Target companies have lower levels of liquidity than non-targets
  6. Valuation: Public target companies have lower valuation multiples than public non-targets 

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