KPMG International just released a study that mines the details of M&A transactions that increased shareholder value. KPMG, along with University of Chicago Graduate School of Business professor Steven Kaplan, analyzed 510 corporate deals announced from 2000 to 2004. Among the findings: Cash was king. Cash acquisitions by companies with low P/E were the most likely to succeed. The average cash deal in the study showed a return of 15.1% after one year and 27.5% after two years. In stark contrast: Average all-stock deals studied returned negative 2.1% at 12 months and positive 3.6% at 24 months.

The deals included in the analysis involved firm's that bought 100% of the target, where the target constituted at least 20% of the acquirer's sales and where the purchase price was in excess of $100 million.

Download the study here

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