Does Political Uncertainty and Political Ideology Place a Discount on the M&A Premiums?

This paper aims to study the relationship between political uncertainty and M&A premium, with emphasis on close calls, political ideology, and political polarization of extreme political parties. We cover a dataset from 2000 to 2022, covering 1646 announced deals in 29 different counties. Our results suggest that ideology can significantly lower the M&A premium in countries that lean more to the right, corresponding to a higher ideology variable. Overall, our findings support the argument that investors place a discount on the premiums in M&A deals on account of the political uncertainty of the target nation.