Risk management and business valuation in M&A transactions: editorial

Abstract

In recent years, new approaches intended to improve the success of mergers and acquisitions (M&A) have gained in importance. Many of these are related to risk management and business valuation practices that have been researched to varying degrees. Therefore, this special issue of the Journal of Management Control is dedicated to risk management and business valuation in M&A. The topic of this special issue is motivated by the fact that management accountants are deeply involved inM&A inmany countries of theworld, e.g. inGermany (Borchers 2006). In particular, management accountants design risk management instruments and support or conduct business valuations because both are integral parts of valuebased management systems (Rappaport 1986). While business valuation methods directly provide guidance about the maximum purchase price, risk management tools help firms appropriately addressM&A inherent risks. As such, both areas entail important elements of management accountants’ toolbox that facilitate decision-making and thus potentially improve firm performance. M&A transactions are a worthwhile opportunity to study how risk management instruments and business valuation techniques affect firmperformance. This is because M&A represent large, visible, and clearly defined managerial investment decisions. Prior research suggests that a considerable proportion of M&A negatively affect the acquiring firm’s shareholder value (Haleblian et al. 2009). A vital explanation for these negative effects is the acquirers‘ informational disadvantage about the target’s characteristics and the corresponding valuation uncertainty (e.g., Cadman et al. 2014).