Are companies getting better at M&A?

During the avalanche of M&A at the end of the 1990s, many companies overpaid for acquisitions and destroyed value for the shareholders of the acquirers.
As 2006 M&A activity approaches new records, acquirers seem to be creating more value than they did in the past, judging from an analysis of value creation and of the proportion of acquirers that overpay.

Exhibit 1: Global M&A activity in 2006 surpassed the peak level reached in 2000.
Exhibit 2: Both cash and stock deals are doing better in the current boom than during the one that ended in 2000.
Exhibit 3: Both deal value added and proportion overpaying, which headed in the wrong direction during the last M&A boom, are now heading in the right one.
Exhibit 4: Average deal premiums were around 30 percent in the late 1990s but nearer 20 percent now, helping to reduce the proportion of overpayers.

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