Author(s)

Jun Shen

Corresponding Author

Jun Shen

Abstract

The phenomenon of "three-high mergers and acquisitions" characterized by high valuation, high goodwill, and high performance commitments often leads to significant declines in performance, which severely dampens the enthusiasm of market participants and hinders the stable development of the M&A market. Therefore, it is essential to further investigate the relationship between M&A premiums and performance. This study approaches the issue from the perspective of patents, aiming to find solutions to M&A risks through patent-related factors. An empirical study based on M&A and restructuring events in China reveals that M&A premiums have a significant negative impact on M&A performance—the higher the premium, the lower the performance. However, patent factors can mitigate the negative impact of M&A premiums on the return on equity, offsetting the adverse effects of high premiums on M&A performance. This study highlights the value and role of patents in M&A risk management, enriching the research on M&A risk control. The findings help deepen the understanding of patent value, M&A premiums, and synergies, providing insights and references for the stable development of the M&A market.

Keywords

Patents, M&A Premium, M&A Performance, Relationship, Hedging