Examining the Relationship Between the Takeover Premium and the Environmental, Social and Governance Performances of a Target Firm

In a context characterized by an increasing number of mergers and acquisitions (M&A) deals, it is important to analyze the impact of sustainability performance on deal outcomes. Actually, the evidence in the literature sometimes reaches quite different results. Thus, the study aims to investigate the possible existence of a relationship between the acquisition premium paid in an M&A transaction and a target firm’s environmental, social and governance (ESG) performance, as well as to understand which ESG component has the strongest influence on the takeover premium. 111 and 102 M&A transactions closed, respectively, in 2021 and 2022, involving listed target companies active in both the European and North American markets, were analyzed through a connection analysis and a regression approach. The results obtained, in line with those of others in the literature, show that the acquisition premium is not linked in any way to ESG performances. These findings shed light on the actual importance of ESG factors in the valuation of the takeover premium.