City Research Online

Does the Early Bird Always get the Worm?

Vitkova, V. & Koh, K. Y. Q. (2016). Does the Early Bird Always get the Worm?. London, UK: M&A Research Centre, Cass Business School, City, University of London.


M&A can be motivated by many different things and it is not unnatural to believe that these motivations could be dependent on where we are in the M&A cycle. By extension if we believe that different motivations lead to different ‘success’ rates then there could be different success rates at different points in the cycle. This is the topic of this report.

First movers have historically been feted for their strategic motivations in pursuing M&A and the advantages gained from moving early, such as the availability of attractive targets. In contrast, late followers have been characterised as firms that exemplify irrational behaviour as they are compelled by competitive pressures to mimic the actions of their rivals without a logical rationale for the motivations underlying the M&A announcement.

We set out to test this simplistic view and in this report we tested the difference in performance between first movers and late followers using a sample of global M&A deals for two periods, Wave 1 (1990-2002) and Wave 2 (2003-2009).

We found considerable evidence that this simplistic view may not be correct, with our so called ‘late followers’ at least as successful as the ‘first movers’.

Before we highlight some relevant practical findings for practitioners we will also show that there may be something different about the latest M&A wave. There are certain features of this second wave (notably the prevalence of cross-border M&A) that may make first mover advantage less prevalent. In addition, insight from literature in other fields may be casting those first movers in a less unreservedly flattering light, which should give managements pause in their attempts to be the first to acquire.

We conclude:
- It’s not too late. If you find a compelling M&A opportunity but you feel others have invested in that area already, it’s not necessarily a bad thing.
- Something’s changed in the latest wave The M&A market is becoming more about new geographies and opportunities, deals where the more you know before you proceed, the better.
- M&A can and does add value Unavoidably, we looked at the data and saw a generally positive reaction to acquisitions, regardless of which end of the ‘wave’ we are at.

And perhaps, judging by the positive reception given by the market to both our first movers and late followers, we must conclude that you don’t want to be caught in the middle.

In M&A, unlike nature, the early bird may not always get the worm!

Publication Type: Monograph (Working Paper)
Additional Information: Copyright Cass Business School, 2016.
Subjects: H Social Sciences > HG Finance
Departments: Bayes Business School > Finance
[thumbnail of Does the early bird always get the worm Final.pdf]
Text - Published Version
Download (238kB) | Preview


Add to AnyAdd to TwitterAdd to FacebookAdd to LinkedinAdd to PinterestAdd to Email


Downloads per month over past year

View more statistics

Actions (login required)

Admin Login Admin Login