Mergers and Acquisitions Law

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Volume 93.4
How Deals Die
Da Lin
Senior Lecturer, Victoria University of Wellington; Affiliated Scholar, University of Richmond School of Law.

We are grateful to Adam Badawi, Albert Choi, Elisabeth de Fontenay, Jeff Gordon, Steven Haas, Lawrence Hamermesh, Scott Hirst, David Katz, Ronald Masulis, Holger Spamann, and Randall Thomas for generous conversations and valuable feedback, and to workshop participants at the Conference on Empirical Legal Studies, Junior Faculty Forum, NYU/Penn Conference on Law & Finance, Tulane Corporate Law Roundtable, Winter Deals Conference, the University of Richmond School of Law, Temple University Beasley School of Law, Vanderbilt Law School, and the New Zealand Takeovers Panel. The production of this Article involved a team of exceptional research assistants too large to mention here, to whom we are immensely grateful and whose names we list in Appendix A.

Morgan Ricks
Herman O. Loewenstein Chair in Law, Vanderbilt Law School.

We are grateful to Adam Badawi, Albert Choi, Elisabeth de Fontenay, Jeff Gordon, Steven Haas, Lawrence Hamermesh, Scott Hirst, David Katz, Ronald Masulis, Holger Spamann, and Randall Thomas for generous conversations and valuable feedback, and to workshop participants at the Conference on Empirical Legal Studies, Junior Faculty Forum, NYU/Penn Conference on Law & Finance, Tulane Corporate Law Roundtable, Winter Deals Conference, the University of Richmond School of Law, Temple University Beasley School of Law, Vanderbilt Law School, and the New Zealand Takeovers Panel. The production of this Article involved a team of exceptional research assistants too large to mention here, to whom we are immensely grateful and whose names we list in Appendix A.

The risk of deal breakage is central to merger and acquisition (M&A) dealmaking. Yet neither the finance nor corporate law literatures have systematically explored how and why deals fall apart. This Article rectifies this deficiency, making three principal contributions. First, it develops a comprehensive typology of eight M&A outcomes: completed-as-announced deals and seven types of deal breakage. Second, it unveils a novel dataset of 5,058 mergers and acquisitions involving U.S. public company targets signed between 1996 and 2020. Finally, it demonstrates how the Article's typology and data yield important implications for M&A practice and doctrine by casting new light on key debates over deal protection devices, the power of controlling shareholders, and “merger arbitrage” investors.

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