A unified theory of forward‐ and backward‐looking M&As and divestitures

In a unified theory of forward‐ and backward‐looking mergers and acquisitions (M&As) and divestitures, an M&A today may be a cause for a divestiture in the future; conversely a divestiture today may be a consequence of an M&A in the past. M&As and divestitures are not only two sides of the same coin, they are also causes and consequences of each other. In this paper, in a two‐period model, two firms consider integrating or separating in each period. We analyze forward‐ and backward‐looking M&As and divestitures, and compare them with static M&As and divestitures.