1. The studies also show that sellers of companies capture a large fraction of the gains from merger. See Michael C. Jensen and Richard S. Ruback, ‘The Market for Corporate Control: The Scientific Evidence’, Journal of Financial Economics, April 1983, p. 5;
2. and Michael C. Jensen, ‘Takeovers: Folklore and Science’, HBR, November–December 1984, p. 109.
3. Some recent evidence also supports the conclusion that acquired companies often suffer eroding performance after acquisition. See Frederick M. Scherer, ‘Mergers, Sell-Offs and Managerial Behavior’, in Lacy Glenn Thomas (ed.) The Economics of Strategic Planning (Lexington, Mass.: Lexington Books, 1986) p. 143;
4. and David A. Ravenscraft and Frederick M. Scherer, ‘Mergers and Managerial Performance’, paper presented at the Conference on Takeovers and Contests for Corporate Control, Columbia Law School, 1985.
5. This observation has been made by a number of authors. See, for example, Malcolm S. Salter and Wolf A. Weinhold, Diversification Through Acquisition (New York: Free Press, 1979).