Abstract

Mergers and acquisitions (M&As) have become a more and more important topic in the management and development of companies. Companies usually conduct M&A to preserve or extend their competitive advantages. However, M&As usually fail in real life. For the given bidder company, a critical step to the success of M&A activities is the appropriate selection of target companies. Previous studies rarely considered the profile of the bidder company and its compatibility with candidate target companies. Although data envelopment analysis (DEA) has been applied in M&A, previous studies in this area haven’t discussed the selection. In this paper, DEA was applied to support the decision making of mergers and acquisitions for decision making units (DMUs), i.e., the companies. We established a greedy algorithm to implement the selection process. This approach can make up the deficiencies of previous studies in some degree because it considers bidder and target company simultaneously.

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