Acquirer's return and the choice of acquisition targets: Does acquisition experience matter?

We study a sample of 6503 UK acquisitions completed between 1985 and 2004 and control for previous deals similarities. Returns for frequent acquirers decrease constantly but they remain positive through high-order deals. We do not detect an improving pattern of returns but, at best, a stable one when the deal is settled for cash. Using 'characteristics-based' experience variables, our multivariate analysis shows that the acquirers' returns are unaffected by prior acquisition experience. However, we find solid evidence for acquirers drawing inferences from prior experience in designing the method of payment, selecting the organizational form of the target firm and engaging in focused acquisitions, which is consistent with learning through acquisitions. The results are robust to various consistency checks.