Publication Date

Fall 12-10-2025

Keywords

Mergers, Acquisitions, Target Firms

Abstract

This thesis explores the means by which mergers and acquisitions (M&A) create value for target, or acquired, firms in the transaction. This contradicts the commonly held belief that M&A deals harbor disproportionate benefits for acquiring firms, with the general assumption being that the acquirer gains the most created value from the formed synergies. Seeking to combat this belief, a comprehensive framework for assessing target firm value creation is established, built upon research of corporate strategy concerning market expansion, economies of scale and scope, and enhanced competitive advantage. Most importantly, the formation and valuation of synergies is covered extensively, expanding on the established framework and assessing preexisting valuation models. Further attention is placed on the risk presented by regulatory scrutiny from the Federal Trade Commission and the United States Department of Justice, more specifically in the fields of antitrust law and legal injunctions. The role of the corporate attorney in administering and navigating the challenges of M&A transactions is discussed in relation to these laws and threats, prescribing a viable method for mitigating damages from the stated challenges. Furthermore, the importance of collaboration between management and internal decision-makers in both target and acquiring firms is emphasized, as well as the necessity of their cooperation with corporate attorneys, to illustrate how legal strategy integrated in the acquisition planning can preserve value and avoid judicial scrutiny. Through the combination of past M&A case studies, valuation model analysis, and existing literature and research, a reflective framework for assessing how target firms can utilize M&A transactions as vehicles of long-term competitive advantage is offered. By shifting the narrative around target firms in mergers and acquisitions, this thesis hopes to provide a new approach for viewing these corporations and evaluating their post-merger value creation.

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