Looking at the long list of failures of acquisitions, I can see that an answer to the driving factors should be from interest. Especially neglected factors such as culture should be at the core of for example due diligence processes. When I look at the results of my research I can see that specific values classify a merger as beeing value-creating or value-destroying. So both from an academic as well as practical point of view this sounds like an important question to answer.
A few overlapping factors can be at play here, in my experience & reading:
Remember these drivers are overlapping not mutually exclusive.
Good question!!
The attached file is good starting point.
Also, https://www.collectivecampus.io/blog/10-companies-that-were-too-slow-to-respond-to-change
Due to change in Govt. regulations, various Big corporate houses may enter the foreign markets to expand their business by acquiring local companies of that nation(which was not allowed earlier as per earlier norms). Like, in India, due to the change in the Economic Policy in 1991 allowing Liberalisation, Privatisation and Globalisation, Coca-Cola entered India, and acquired various local brands like Thums Up, Limca, Maaza, Citra and Gold Spot.
I will refrain from answering academically as this your literature review will cover in depth. From personal experience in PE, here is my thought.
It used to be the case that PE firm could simply buy at 3-5x and sell at 7x earnings. With this gap having closed, a lot of PE firms had to add real value before selling. However, there is a last arbitrage being still being exploited. The firm size premium. PE firms buy mid-market companies, add a corporate finance executive within the portfolio firm and go an aggressive buy-and -build strategy. The increased size of the firm reduces the risk and discount rate.
I believe this is but one of the reasons for the large scale M&A activity in the market we see today.
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