KPMG has analyzed the stock performance of over 300 corporate mergers and acquisitions and found that stock deals outperformed all-cash deals.
The study analyzed 311 global deals announced between Jan. 1, 2007 and Dec. 31, 2008 at both one and two years after the announcement of the deal.
The study found that 2007 deals financed with cash declined on average 12.7 percent after one year and 9.2 percent after two years. In comparison, 2007 stock deals only declined an average of 5.1 percent after one year and increased 1.3 percent after two years.
While cash acquisitions announced in 2008 increased an average of 1 percent after one year, outperforming stock deals which declined an average 3.2 percent, 2008 stock deals rebounded after two years, with an average increase of 2 percent compared to just a 0.9 percent increase in cash deals after two years. That was a change from two earlier studies conducted by KPMG in 2007 and 2009.
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