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Brand Driven Acquisitions: Do They Create Shareholder Value?

Ref: fin0025

Brands are prevalent in every aspect of business today and are often the sole reason a firm will conduct a merger or acquisition. Until this study the literature on the shareholder wealth effects of brand acquisition has been limited. This paper analyses the long-term wealth effects of brand-driven acquisitions and compares the abnormal returns with a benchmark sample of firms involved in non brand-driven deals. A comparison provides the opportunity to understand which type of deal creates greater abnormal returns for the acquirer shareholders. The study finds significant evidence for the hypothesis that brand-driven acquisitions are more beneficial for shareholders. While both types of deals create significant abnormal losses for the shareholders there is evidence that brand-driven acquisitions destroy less value. The study finds that over the 25 month period being studied the brand-driven deals provide a significant abnormal loss of 12.84% compared with a significant loss of 20.67% from non brand-driven deals. The results suggest that while brand-driven deals destroy shareholder value, the negative affect is significantly less than for non brand-driven deals. This study along with future research should provide a sufficient financial understanding of the affect brands have on shareholder value and possibly lead to the creation of a strategic framework.

  • 13,000 words - 50 pages in length
  • Excellent use of literature
  • Expertly written throughout
  • Good in depth analysis
  • Ideal for finance and business students


1. Introduction

2. Literature Review
Brand Strategy
Value creation through branding
Prior Merger and acquisition literature
Research question
Hypothesis

3. Data and Methodology
Sample section and data sources
Benchmark Sample
Sample Characteristics
Methodology
Definition of explanatory variables
Acquirer focus
Sales prowess
Ultimate consumer
Divestiture
Acquirer brand portfolio diversity
Relative Deal Size

4. Long-term shareholder wealth effects
Brand driven deals versus Non Brand-driven deals
Corporate Branding versus House-of-Brands strategy
Business-to-Consumer versus Business-to-Business
Relative Deal size abnormal returns analysis
Divested Brands versus Non Divested Brands
Focus increasing deals versus Focus decreasing deals
Sales growth over 10% versus Sales growth less than 10%

5. Multivariate returns analysis

6. Conclusion

References



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