4. Empirical analysis
4.2. Identification of patterns of M&A at the industry level
4.2.2. Generation of M&A transaction relationship network
We constructed an M&A transaction relationship network to visualize the directed transaction relationships between industries and measure the characteristics of each industry within the M&A context based on network analysis. The resulting M&A transaction rules were the source of node and edge lists. Fig 5, Fig 6, and Fig 7 show the M&A transaction relationship network in each Phase. In the network, nodes and links represents industry and M&A transaction relationships between industries respectively. When constructing initial network, the value of links is
πΆπππππππππππβπ‘π(π β π) of given transaction rule. In order to measure characteristics of industry within M&A context, the value of links were changed twice : the frequency of the given transaction rule and the average deal value of the given transaction rule in the whole transaction. The size of the node and node label indicates degree-centrality and thickness of link shows the value of link.
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Figure 5. M&A transaction relationship network in Phase 1 (1995-2001)
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Figure 6. M&A transaction relationship network in Phase 2 (2002-2008)
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Figure 7. M&A transaction relationship network in Phase 3 (2009-2016)
Based on the concept of in-degree and out-degree centrality, the characteristics of each node are measured. Table 2 summarizes the characteristics of each industry and six indices (The degree of acquirer, The degree of target, The degree of merge-diversity, The degree of merged-diversity, Average-invest deal value, Average-invested deal value).
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Table 4. Characteristics of industry within M&A context in Phase 1 (1995-2001)
In Phase 1 (1995-2001), 6798 (real estate investment trusts) had the highest The degree of acquirer value. This means that 6798 (real estate investment trusts) merged most actively with other industries, as the acquirer industry. 7372 (prepackaged software) had the highest πβπ ππππππ ππ π‘πππππ‘ value and πβπ ππππππ ππ ππππππ β πππ£πππ ππ‘π¦. A total number of industries that considered the 7372 (prepackaged software) as target industry was 16. 6512 (operators of nonresidential buildings) had the second highest πβπ ππππππ ππ π‘πππππ‘ value and a total number of industries that merged with 6512 (operators of nonresidential buildings) was 7. In terms of 1311 (crude petroleum and natural gas), it belonged to top industry in both characteristics that were The degree of acquirer and The degree of target. High The degree of acquirer and high The degree of target of 1311 explained that M&A transactions that 1311 (crude petroleum and natural gas) merged with other industries and M&A transactions that other industries merged with 1311 (crude petroleum and natural gas) were actively committed. 7379 (computer related services, not elsewhere classified) and 6036 (savings institutions, not federally chartered) were top two industries that they merge with diverse industries. In addition, we confirmed that 3721 (aircraft) is the representative with regard to Average-invest deal value, Average-invested deal value. 3721 (aircraft) only merged with related industries among transaction rules since The degree of merge-diversity and Average-invested deal value are both 1. It means that
Industry The degree of acquirer
The degree of target
The degree of merge- diversity
The degree of merged- diversity
Average- invest deal value
Average- invested deal value
6798 1615.0000 286.0000 3.0000 1.0000 102.0580 255.4796
7372 1312.0000 1624.0000 1.0000 19.0000 57.8697 82.7450
6512 55.0000 1072.0000 2.0000 7.0000 44.3374 58.8204
6021 1172.0000 853.0000 3.0000 5.0000 315.6916 372.5597
1311 700.0000 769.0000 1.0000 7.0000 225.4415 232.2317
β¦ β¦ β¦ β¦
7379 134.0000 204.0000 4.0000 1.0000 100.6258 5.3345
6036 96.0000 140.0000 4.0000 1.0000 270.1995 5.3193
7375 548.0000 803.0000 2.0000 12.0000 73.3835 61.0133
3721 12.0000 16.0000 1.0000 1.0000 1787.7167 1340.7875
2911 70.0000 49.0000 2.0000 1.0000 1121.2620 1438.6974
Mean 57.2370 63.6514 1.3802 1.3812 77.4938 64.3922
Median 18.0000 23.0000 1.0000 1.0000 29.9276 19.3573
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big deals were took place within the 3721 (aircraft) industry. 3721 (aircraft) invested an average of
$ 1,787.7167 billion for M&A transactions to merge with other merger transactions, and an average of
$ 1,340.7875 billion flowed into 3721 (aircraft) from acquirer industries for deal value. 2911 (petroleum refining industry) was set to the highest Average-invested deal value in the M&A market during Phase 1, and acquirer industries paid an average of $ 1438.6974 million to complete the merger with the 2911(petroleum refining industry).
Table 5. Characteristics of industry within M&A context in Phase 2 (2002-2008)
In Phase 2 (2002-2008), 6798 (real estate investment trusts) had the highest The degree of acquirer as in Phase 1. 7372 (prepackaged software) had the highest The degree of target and The degree of merged-diversity. The total number of industries that considered the 7372 (prepackaged software) as a target industry was 18. 1311 (crude petroleum and natural gas) and 6021 (national commercial bank) were typical industries that had both high The degree of acquirer and high The degree of target. 6552 (land subdividers and developers, except cemeteries) was the industry that merged with the most diverse industries. 7375(information retrieval services) had the second highest The degree of merged- diversity. 1021 (copper ores), 2911 (petroleum refining industry), 2111 (cigarettes) and 5331(variety stores) are the industries which had both high Average-invest deal value and high Average-invested
Industry The degree of acquirer
The degree of target
The degree of merge- diversity
The degree of merged- diversity
Average- invest deal value
Average- invested deal value
6798 1166.0000 186.0000 3.0000 1.0000 218.5348 497.9636
7372 1070.0000 1471.0000 1.0000 18.0000 159.3852 144.9244
1311 725.0000 796.0000 1.0000 6.0000 295.3207 286.4442
6021 754.0000 711.0000 1.0000 5.0000 376.1289 443.6941
6552 139.0000 96.0000 4.0000 2.0000 117.9157 16.2436
β¦ β¦ β¦ β¦
7375 413.0000 618.0000 2.0000 15.0000 56.0219 54.8017
1021 8.0000 10.0000 1.0000 1.0000 3339.8953 2671.9162
2911 50.0000 54.0000 1.0000 1.0000 3066.5160 2839.3667
2111 14.0000 10.0000 1.0000 1.0000 1789.6831 2505.5563
5331 7.0000 8.0000 1.0000 1.0000 2235.8857 1956.4000
Mean 48.7387 55.6486 1.4174 1.4174 130.7767 105.4867
Median 17.0000 20.0000 1.0000 1.0000 48.9918 25.3114
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deal value. Considering the four other indices, we were able to analogize that four industries merged with an identical industry respectively via the small number of big deals.
Table 6. Characteristics of industry within M&A context in Phase 3 (2009-2016)
In Phase 3 (2002-2008), 6798 (real estate investment trusts) had the highest The degree of acquirer and appeared only as the acquirer industry within significant transaction rules. 6512 (operators of nonresidential buildings) had the highest The degree of target. 7372 (prepackaged software) had the highest The degree of merged-diversity and the total number of industries that considered the 7372 (prepackaged software) as a target industry was 20. 2731 (books: publishing or publishing and printing) did not actively take other industries over but succeeded in merging with the most diverse industries. In terms of 3674 (semiconductor and related devices), It was regarded as the target industry of a total of nine industries and sold for an average of $ 253.7690 million. 7375 (information retrieval services) received attention in M&A from a total of six industries, but we confirmed that the average deal value was made at a relatively low value of $ 50.6686 million. 5331(variety stores) had the highest Average-invest deal value and considering other indices, the small number of big deals
occurred within industry as Phase 2. 2111 (cigarettes) had the highest Average-invested deal value and the 5211 (lumber and other building materials dealers) had high value both in Average-invest deal
Industry The degree of acquirer
The degree of target
The degree of merge- diversity
The degree of merged- diversity
Average- invest deal value
Average- invested deal value
6798 2219.0000 0.0000 3.0000 0.0000 85.0959 0.0000
7372 720.0000 1188.0000 1.0000 20.0000 189.0336 181.7146
1311 701.0000 889.0000 1.0000 11.0000 288.5891 380.9365
6512 82.0000 1530.0000 1.0000 10.0000 49.0353 100.2029
2731 28.0000 31.0000 4.0000 1.0000 37.1990 21.7876
β¦ β¦ β¦ β¦
3674 331.0000 522.0000 1.0000 9.0000 381.6031 253.7690
7375 252.0000 444.0000 2.0000 6.0000 152.2254 50.6686
5331 8.0000 11.0000 1.0000 1.0000 4155.6151 3022.2655
2111 19.0000 13.0000 1.0000 1.0000 2198.7586 3213.5703
5211 7.0000 8.0000 1.0000 1.0000 2461.0286 2153.4000
Mean 49.4239 61.3010 1.3883 1.3883 189.7527 153.4614
Median 19.0000 24.0000 1.0000 1.0000 57.1306 33.1726
26 value and Average-invested deal value.