Systematic and Unsystematic Drivers of Mergers and Acquisitions in the United Kingdom

Abstract

Mergers and Acquisitions (M&A) play a crucial role in corporate growth and economic development; however, the factors driving M&A activity remain complex and not fully understood. This study examines the systematic and unsystematic drivers of M&A activity in the United Kingdom between 1980 and 2022. To achieve this objective, a mixed-methods approach was adopted. Systematic drivers were analysed quantitatively using Ordinary Least Squares (OLS) regression, with macroeconomic variables including GDP growth, inflation, exchange rates, trade balance as a percentage of GDP, and stock prices. Unsystematic drivers were explored qualitatively through thematic and content analysis of relevant literature and evidence. The findings reveal that several systematic factors significantly influence the number of announced M&A transactions. GDP growth, inflation, and exchange rates exhibit positive relationships with M&A activity, while trade balance as a percentage of GDP and stock prices are negatively associated with M&A transactions. The qualitative analysis further demonstrates that unsystematic factors, particularly cultural and managerial considerations, have an important bearing on the success and failure of M&A deals. These findings contribute to a broader understanding of the economic and organisational factors that shape M&A activity in the United Kingdom and offer valuable insights for policymakers, investors, and corporate decision-makers.