Assessing Value Creation in Italian M&A Transactions: A Regression Analysis and Event Study Approach

Mergers and Acquisitions (M&A) play a crucial role in reshaping the corporate environment and driving strategic growth across various industries. In recent decades, M&A activity has become increasingly prevalent, with companies leveraging these transactions to achieve synergies, expand market presence, achieve long-term growth objectives and enhance shareholder value. Despite the potential strategic benefits and value creation opportunities associated with M&A transactions, they are not without challenges and risks and it is common to see examples of M&A deals leading to a loss of value for shareholders. Understanding the dynamics, drivers, and outcomes of M&A transactions is therefore essential for stakeholders, including investors, managers, policymakers, and academics. This master's thesis aims to analyse the value creation potential of M&A transactions within the peculiar context of the Italian market, characterized by the preference of companies for the debt market and the presence of small-sized transactions focused mostly on the mid-market. The analysis is conducted through an empirical investigation on a dataset of Italian deals from 2015 to 2018, observed for a time horizon of a decade, and focuses on the search for an increase in the value of equity post-deal for the companies undergoing an M&A transaction, first evaluating the aggregate generic case, then discriminating among Bidder and Target companies and finally among Acquisitions and Mergers. Furthermore, the same models are used to look for evidence of an effect of the M&A deal on corporate profitability and financial strength metrics. The findings show how companies undertaking an M&A transaction experience on average a significant increase in the value of equity and support the thesis that M&A in Italy creates, indeed, value.