Interpreting the M&A Black Box by Thinking Outside the Box

The purpose of this chapter is to provide policymakers with data and insights to better evaluate the current worldwide debate on debt merger acquisitions, as well as shed some light on the perils of stringent financial bans on these types of transactions. Debt merger acquisitions (M&A) represent deals that are financed primarily with debt and are accomplished with a merger between the target and the investee company. These types of deals are very common in the European private equity (PE) industry and play an important role in reinforcing the market for corporate control, as well as in reducing agency costs by reorganizing the ownership structure of target companies and guaranteeing a better alignment of stakeholders’ interests.