In our paper targets, by setting a reserve price, screen acquirers on their (expected) ability to generate merger …-specific synergies. Both empirical evidence and many common merger models suggest that the difference between high- and low … acquirers increases and, hence, targets screen less tightly during booms, which leads to a hike in merger activity. Our …

implications of merger activity for aggregate economic outcomes. The theory is consistent with a rich set of micro-level facts on … US M&A, including, e.g., sorting among merging firms, a substantial merger premium and serial acquisition. It provides a … sharp link between these facts and the nature of merger gains. Estimating the model shows that both synergies, i …