The Effects Of Economic And Political Developments On Mergers And Acquisitions

This paper examines the effects of economic developments,such as the European Central Bank’s interest rate level,political stability,economic growth and the financial crisis on aggregate merger levels in Germany between 1999 and 2016.The research consists of a profound combination of quantitative and qualitative findings.The findings generated in the course of a statistical analysis of time-series data using a multivariable model are majorly in line with the conclusions of the literature analysis:During the sixth and seventh merger wave political stability was a major determinant for aggregate M&A levels as well as economic growth.The analysis showed that merger waves are more likely to occur in politically stable and economically prosperous environments.Moreover,significant evidence was found that merger levels recovered after the financial crisis of 2008 and even exceeded pre-crisis levels.Against the expectations,which were based on the current state of the art in research elaborated within the literature review,the statistical analysis indicated that the volume of M&A deals is larger during periods of higher interest rates.As this raised some questions due to possible ambiguity this finding contained,further research was conducted on this matter.Qualitative research was conducted by gathering opinions of four experts in the field of M&A in Germany.The qualitative findings showed that during the seventh merger wave,abundant liquidity in the form of low and negative interest rates represented a major driver for managers to engage in mergers and acquisitions.