Exploring the post-M&A ESG value creation: A contingency approach

This study explores the M&A-ESG relationship by focusing on whether and how M&As affect the ESG results accrued after the deal. Building on congruence theory and the resource-based view theory as fundamental theoretical underpinnings of acquirer-to-target fit and potential complementarity, we take a contingency perspective arguing that the extent to which M&As enhance ESG outcomes is a function of two factors at the target selection and deal structuring stage, namely the acquirer-to-target ESG divergence and the amount of controlling interest acquired. Based on a dataset of 199 global, multi-industry deals completed in the 2015-2022 period, we employ a difference-in-difference method (DiD). Our results emphasize that greater ESG results in the post-deal can be obtained when the merging firms have similar pre-deal ESG positioning and the acquirer does not take the full ownership of the target firm. Overall, our preliminary findings shed new light on the importance of adopting a dyadic perspective to the study of the sustainability implications of M&As.