Identification of Merger and Acquisition Waves and Their Macroeconomic Determinants in the Hospitality Industry

Abstract

This study investigated the occurrence of merger and acquisition (M&A) waves in restaurant and lodging industries. By comparing actual frequency of M&A deals with simulated randomly generated deal frequency distributions, this study proved the presence of restaurant and lodging M&A waves. Macroeconomic determinants of the waves were then identified using factor analysis to extract underlying latent factors from 16 macroeconomic variables and employing a distributed lag model to investigate the effect of the extracted macroeconomic factors on the waves. Results showed that all factors (overall activity, market value, cost of debt, and inflation) significantly affected deal frequency in the hospitality industries studied. Theoretical and practical implications of the findings are presented.