An approach to two-sided M&A fits based on a cross-efficiency evaluation with contrasting attitudes

Two‐sided mergers and acquisitions (M&A) fits have been regarded as a critical step, which should always be taken by a bidder company when trying to identify suitable target companies prior to an M&A. This paper proposes an approach to two‐sided M&A fits based on a cross‐efficiency model with contrasting attitudes. In this approach, firstly, feasible M&A fits are screened using a preference function from an M&A fit matrix, according to the preferences of both the bidder companies and target companies in terms of efficiency and return to scale. Secondly, two‐sided M&A fits are selected from a feasible M&A fit matrix, according to the value of cross‐efficiency with contrasting attitudes. This allows for the existence of contrasting attitudes of peers toward an M&A fit, as opposed to the aggressive, benevolent or neutral cross‐efficiency evaluation which consists of just one attitude (either aggressive, benevolent or indifferent). Finally, an illustrative example is given to explain the feasibility and validity of the two‐sided M&A fit strategy.