How Do Mergers Create Value ? A Comparison of Taxes , Market Power , and Efficiency Improvements as Explanations for Synergies

@inproceedings{Devos2007HowDM,
  title={How Do Mergers Create Value ? A Comparison of Taxes , Market Power , and Efficiency Improvements as Explanations for Synergies},
  author={Erik Devos},
  year={2007}
}
There is little evidence in the literature on the relative importance of the underlying sources of merger gains. Prior literature suggests that synergies could arise due to taxes, market power, or efficiency improvements. Based on Value Line forecasts, we estimate the average synergy gains in a broad sample of 264 large mergers to be 10.03% of the combined equity value of the merging firms. The detailed data in Value Line projections allow for the decomposition of these gains into underlying… CONTINUE READING
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