Macroeconomic Conditions and Corporate Mergers: A study on the Swedish M&A market

Abstract

This thesis examines the relationship between the aggregate merger and acquisition (M&A) transactions and macroeconomic variables of Sweden spanning from January 2001 to April 2024. The study aims to explore how macroeconomic factors, such as interest and unemployment rates might influence the M&A activity of the Swedish market and corporations willingness to engage in mergers and acquisitions. This is done with the utilization of a multiple linear regression analysis, where three different time lags also are incorporated. The inclusion of the time lags will account for delays between planning and the announcement of M&A deals. The research indicates that there is a statistically significant and negative relationship between the Swedish policy rate and the monthly M\&A transaction volume. This finding indicates that lower interest rates may encourage an increase in the number of M\&A transactions due to valuation and leveraging reasons. Interestingly, the findings, furthermore, show a positive relationship between unemployment rates and M&A activity. This may suggest that firms will engage in more mergers and acquisitions opportunistically during economic downturns. These results contribute to the understanding of a more complex interplay of the macroeconomic conditions and the corporate merger strategies in Sweden.