What is the impact of M&A on the value of publicly traded acquiring companies in the cybersecurity sector?

Details

Supervisors

Grégoire, Philippe

Faculty

Louvain School of Management

Degree label

Master [120] : ingénieur de gestion, à finalité spécialisée

Abstract

enThis thesis investigates the impact of mergers and acquisitions (M&A) on the value of publicly traded acquiring firms in the cybersecurity sector. Despite the rapid consolidation that has reshaped the industry since the acceleration of digital transformation, no prior study has quantitatively examined the stock-market response to M&A announcements made by pure-play cybersecurity acquirers. This thesis addresses that gap. Using an event study methodology, a sample of 71 acquisitions announced by 12 US-listed, pure-play cybersecurity firms between January 2021 and March 2026 is analysed. Cumulative abnormal returns are computed over three event windows [-1, +1], [-2, +2] and [-5, +5] using the market model with the NASDAQ Composite as benchmark. The robustness of the findings is verified against the S&P 500. A cross-sectional regression then examines whether three deal-level determinants (method of payment, cross-border status and relative target size) explain variation in acquirer returns. The results show that M&A announcements made by pure-play cybersecurity acquirers generate statistically significant negative abnormal returns at the 5% level across all three event windows, with a mean CAR[-1, +1] of -1.31%. Only 42.3% of deals show a positive CAR[-1, +1], indicating that the negative reaction is not driven by a few outliers. This finding contradicts the dominant tech literature, which typically documents positive bidder returns for high-tech acquirers. However, it aligns with the general M&A consensus of neutral-to-negative acquirer returns and is in line with theoretical explanations, such as the hubris hypothesis, free cash flow theory and investor uncertainty about target valuation. The cross-sectional analysis finds no robust evidence that the method of payment, cross-border status or relative target size explain differences in returns within the sample. These results provide the first sector-specific evidence on cybersecurity M&A performance and they invite further research into the long-term performance of these deals and the sector-specific factors that shape investor response.