# A Deep Learning Method for Predicting Mergers and Acquisitions: Temporal Dynamic Industry Networks

arXiv: https://arxiv.org/abs/2404.07298 · HTML: https://mlsanity.com/paper/2404.07298/

## Key facts

- No citing papers in the map yet (data through 14 Oct 2026).
- Builds on 2 of its 22 references that are in the map.
- First posted on arXiv 10 Apr 2024.

## Builds on (most cited first, 2 of 2)

- [Inductive Representation Learning on Large Graphs](https://mlsanity.com/paper/1706.02216/) (2017)
- [Neural Relational Inference for Interacting Systems](https://mlsanity.com/paper/1802.04687/) (2018)

## Abstract (arXiv)

Merger and Acquisition (M&A) activities play a vital role in market consolidation and restructuring. For acquiring companies, M&A serves as a key investment strategy, with one primary goal being to attain complementarities that enhance market power in competitive industries. In addition to intrinsic factors, a M&A behavior of a firm is influenced by the M&A activities of its peers, a phenomenon known as the "peer effect." However, existing research often fails to capture the rich interdependencies among M&A events within industry networks. An effective M&A predictive model should offer deal-level predictions without requiring ad-hoc feature engineering or data rebalancing. Such a model would predict the M&A behaviors of rival firms and provide specific recommendations for both bidder and target firms. However, most current models only predict one side of an M&A deal, lack firm-specific recommendations, and rely on arbitrary time intervals that impair predictive accuracy. Additionally, due to the sparsity of M&A events, existing models require data rebalancing, which introduces bias and limits their real-world applicability. To address these challenges, we propose a Temporal Dynamic Industry Network (TDIN) model, leveraging temporal point processes and deep learning to capture complex M&A interdependencies without ad-hoc data adjustments. The temporal point process framework inherently models event sparsity, eliminating the need for data rebalancing. Empirical evaluations on M&A data from January 1997 to December 2020 validate the effectiveness of our approach in predicting M&A events and offering actionable, deal-level recommendations.