Covid-19 pandemic merger wave

Abstract

This thesis investigates whether the Covid-19 pandemic initiated merger waves at the aggregate and industry level. Recovery from the Covid-19 pandemic coincides with economic expansion, industry shocks and stock market boom, all potential triggers of restructuring activity. My sample covers 104,464 merger and acquisition deals of public and private US target firms from April 1, 2012, to March 31, 2022. In order to identify industry-level merger waves, I simulate the distribution of monthly deals. I then calculate the probability that the realized peak deal concentrations in any 24-month period are within the 95th percentile of the simulated distributions. I identify an industry as experiencing a merger wave if the realized deal concentration in any 24-month period is in the upper five percent of the simulated distribution of monthly deals. The method yields 37 industry-level merger waves between April 1, 2012, to March 31, 2022. 23 of these waves start during the Covid-19 pandemic period from January 1, 2020, to March 31, 2022. Deals in industry-level merger waves comprised around 80 percent of all deals in the Covid-19 pandemic period and formed an aggregate merger wave that started on April 1, 2020.