Mergers and Acquisitions research often focuses on the
prices paid, as a multiple of earnings or cash flow, by
strategic acquirers for their targets. These multiples
are salient to this body of research, as they form the
basis of company valuation on a theoretical and
practical level. A variety of factors influence the size
of these multiples, including prevailing macroeconomic
conditions, the particular industry of the target
company, the target’s profitability, and
company-specific factors such as the market’s perceived
risk of the target. This paper analyzes the relationship
between multiples paid in strategic acquisitions and
prevailing macroeconomic conditions, as well as
accounting measures of the target company, with the goal
of assessing whether or not macroeconomic conditions or
company-specific characteristics play a role in
determining the multiple paid. pdf 2001
