• 1. "The Importance and Complexity of Mergers and Acquisitions (M&As) in Business Development"

  • 2. "Roles of Various Stakeholders in M&A Transactions: Investment Banks, Legal Advisors, and Regulators"

  • 3. "Growing Research Interest in M&A Activities: Trends, Motivating Factors, and Effects on Company Performance"

  • 4. "Identifying Characteristics of Target Firms in M&A Transactions: A Review of Previous Studies"

  • 5. "The Understudied Aspect of M&As: Predicting Acquirer Characteristics and Their Likelihood of Participation in M&As"

Merging with or acquiring another firm is one of the most critical business development decisions a company can make to strengthen itself (Adelaja & Mukhopadhyay, 2022; Cristerna & Ventresca, 2020). In the mergers and acquisitions (M&As) process, an acquirer (or buyer) strategically pursues a target firm (or seller) in the case of an acquisition (or takeover). However, in the case of a merger, the two firms explore and execute a combination strategy, which is usually initiated and led by the dominant firm that essentially acts like an acquirer. Also, the M&A process often involves others. For example, an investment bank (IB) may assist with deal financing or act as an acquirer itself, a legal advisory (LA) service firm may help structure deal terms or advise on legal matters, and a regulator (REG) evaluates and possibly rejects the deal if it falls short of existing antitrust standards to prevent excessive market control or monopoly power (Adelaja & Mukhopadhyay, 2022). Given the importance and growing complexity of M&A transactions and the implications for consumers, shareholders, and other stakeholders, research interest in M&A activities has grown in recent years.)The M&A literature spans several areas, including M&A trends1; motivating factors2; effects on company performance and industry structure3; benefits to stakeholders4; roles of transaction advisers5; probability of deal failure6; transparency, disclosure, and asymmetric information7; regulatory issues8; cross-border, cross-industry, and vertical transactions9; implications of time to completion for benefits realization10; and targets and acquirers prediction.11 Participant prediction studies (the last one above) have largely focused on targets, identifying the characteristics of firms and estimating their effects on the probability of being targeted (e.g., Pervan & Pervan, 2010).12 These studies used selected financial ratios and other factors as proxies for identified determinants. For example, Adelaja et al. (1999) identified the determinants of the probability of a firm being targeted, as well as factors contributing to the likelihood of deal completion.Only a few studies have directly examined the acquirer side of M&As. For example, for the EU banking sector, Beccalli and Frantz (2010) found that banks become acquirers when they have low net interest margins while private recapitalizations occur for banks with lower equity, higher net interest margins, and positive bank-level growth. Özer et al. (2022) focused on the US insurance industry, finding that more profitable firms are more likely to be acquirers. Most other studies which explored the acquirer side of M&As were limited in their contributions to acquirer prediction in that they mostly skirted around the issue and did not directly develop predictive models relating acquirer characteristics to the likelihood of being an acquirer. For example, in their work on the likelihood of being targeted, Kumar and Rajib (2007) found that vis-à-vis their acquirers, targets are smaller; have lower cash flows, PE ratios, book values, and liquidity, and have greater leverage and debt-to-total assets ratio. Also, while investigating cultural differences between acquirers and their targets, Popli and Kumar (2015) found cultural distance to be a good predictor of the likelihood of cross-border deal completion. Because these other studies did not directly estimate the relationships between determinants and the probability of being an acquirer, the literature on acquirer prediction is sparse.