Value Creation by Mergers and Acquisitions
Paper Session
Sunday, Jan. 4, 2026 2:30 PM - 4:30 PM (EST)
- Fei Xie, University of Delaware
Learning Production Process Heterogeneity: Implications of Machine Learning for Corporate M&A Decisions
Abstract
We introduce novel metrics to evaluate production process heterogeneity using both machine learning (ML) and traditional kernels. ML kernels, particularly through economically motivated transfer learning models, enhance M&A forecasting accuracy. A wider gap in firms’ production processes predicts fewer M&As, lower success rates, reduced returns, diminished post-M&A growth, and increased divestiture. Dynamic learning among repeat acquirors alleviates the adverse effects of production process dissimilarity on post-M&A growth. The adoption of Right-to-Work laws, reducing employees’ bargaining power, significantly mitigates the detrimental effects of heterogeneous production processes. Our findings emphasize the pivotal role of technology heterogeneity in shaping integration synergy and firm boundary decisions.Acquiring Supplier Networks: Domestic Mergers for International Supply Chain Resilience
Abstract
"Mergers and acquisitions (M&A) are increasingly driven by firms’ need to addresssupply-chain vulnerabilities. We study U.S. mergers from 2007–2020 and identify a novel pattern:
domestic acquisitions between firms that import similar inputs from abroad but operate in
unrelated industries. These deals, distinct from traditional vertical or horizontal mergers, enable
acquirers to diversify their supplier networks. Using granular shipment data from S&P Panjiva,
we construct firm-level profiles of imported products and compare actual mergers to synthetic
industry-matched control pairs. Our analysis reveals that mergers are significantly more likely
when acquirers and targets share similarities in their imported input portfolios—a relationship
amplified by supply-chain risk perceptions, trade-policy uncertainty, or broader economic
disruptions. Post-merger, acquirers expand their supplier base, increase geographic diversification,
and reduce reliance on distant suppliers (“near-shoring”). Shipment frequency rises and order size
falls, reducing inventory risk. Micro-level analyses show that acquirers quickly begin sourcing
from the target’s longstanding suppliers, with adoption probabilities twice as large when the
target’s relationship exceeds three years, highlighting the value of embedded relational capital.
These mergers also generate foreclosure effects. Notably, these mergers exhibit exclusionary
effects: deals are more likely when the acquirer’s suppliers overlap with those of the target’s
competitors. Post-merger, rivals reduce purchases from these shared suppliers, while publicly
traded targets experience improved valuations and sales growth. Our findings highlight two
strategic motives for M&A—securing vetted supplier networks and leveraging market power—
and demonstrate how supply-chain resilience intersects with both operational efficiency and
competitive dynamics in an era of rising geopolitical risks."
The Supply Chain Spillovers of Private Equity Buyouts
Abstract
The impact of private equity (PE) buyouts on target firms is well-documented, yet empirical evidence on their impact across the supply chain remains scarce. We address this gap by leveraging unique production network data to examine how supply chains contribute to PE investors’ ability to create and extract value. We show that, on average, suppliers of PE-backed firms outperform their peers due to increased demand for inputs from PE-backed customers—not due to alternative mechanisms such as knowledge spillovers. In contrast, during economic downturns, while PE-backed firms outperform their peers even more strongly, their suppliers show no signs of outperformance. This can be attributed to PE investors exerting greater pressure on suppliers and more actively reconfiguring supply chains to achieve cost savings for their portfolio companies during periods of economic distress. Finally, beyond their impact on suppliers, we also show that PE buyouts create crowding-out effects for competitors that rely on common suppliers.Discussant(s)
Tania Babina
,
Columbia University
Feng Zhang
,
Southern Methodist University
Mariassunta Giannetti
,
Stockholm School of Economics
Jonathan Cohn
,
University of Texas at Austin
JEL Classifications
- G3 - Corporate Finance and Governance