• Raghuram Rajan

What do repetitive acquisitions teach us?

Our recent JFE paper studies whether firms gain valuable experience from repetitive acquisitions in the mergers and acquisitions (M&A) market. This is an important question, because if repetition translates into learning gains, the effort to structure learning processes within the organization could be a key driver of value creation. If instead repetition does not lead to positive gains, stricter supervision of acquisitions programs would be warranted. By undertaking successive deals, repetitive acquirers have the potential to build experience and acquire knowledge about the takeover process. But repetitive acquisitions increase firm size and diversity, thus generating additional integration costs. If repetition is value creating for shareholders, the increase in acquisition benefits must dominate the increase in integration costs.

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