Dive Brief:
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More than 20 home building companies have been involved in a merger or acquisition in the past two years, according to various studies cited by BUILDER magazine.
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The acquisitions had no immediate effect—good or bad—on stockholder value in 83% of the cases, a detail that one researcher called “unfortunate.”
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The ongoing “acquisition wave” began in 2012, the magazine reported.
Dive Insight:
Researchers who studied past acquisitions identified three reasons why builders during a “wave” should make their move early: 1. Those who wait until later in a wave tend to experience losses related to the acquisition; 2. The longer a company waits to make an acquisition during a wave, the more likely its competitors have cherry-picked the highest quality firms from the pool of those in a position to be acquired; and 3. Acquiring a firm early in a wave quickly strengthens the firm making the acquisition, putting it in a better position to beat competitors to the punch for the next purchase or merger.