Why Companies Do Not Pursue Attractive Mergers and Acquisitions ...

Other potential causal factors have been cited for contributing to the significant growth in European M&As. In the popular business press, Barber, Popper, and Molloy (1992), for example, refered to operational considerations, including clearer accounting standards, fewer exchange controls, and a breakdown of antidemocratic shareholding rules. Irrespective of causal factors, the value of M&A transactions in the region is high and increasing. Moreover, the activity is geographically spread. In 1999, for example, targets in the U.K. were valued at $385 billion, at $266 billion in Germany, at $165 billion in France, and at $109 billion in Italy. In industries characterised by a global restructuring, the level of M&A activity in Europe exceeded that in the United States (Financial Times, 2000).

Because of the proliferation of M&As across industry sectors, companies, and geographic markets, it is reasonable to assume that M&As will continue to play an important role, subject to a plethora of environmental factors that may affect the level of activity year on year.

1.2.2.2. M&A Decisions Are Critical to the Firm

M&A decisions are important to the firm. Christian noted, “At the level of a single transaction, any particular merger or acquisition has the potential to dramatically alter the competitive positions of a number of businesses, each competing in different markets”, (1985, p. 10). While some scholars view acquisitions as nothing more than another type of capital investment decision (Hitt, Hoskisson, & Ireland, 1990), the view that they are highly important and somehow different from other decisions is held by many other M&A researchers. Haspeslagh and Jemison (1991), for example, maintained that acquisition decisions are qualitatively different from other types of major capital expenditure decisions for reasons including the speed and secrecy they require, the lack of information on which they are based, and their inherent risk. Jemison and Sitkin (1986a) suggested that, owing to their discontinuous and fractionated nature, acquisition decisions are fundamentally dif-ferent from other more incremental strategic decisions.