| Summary: | Mergers and acquisitions (M&A) are a big part of the global business environment. Companies often rely on M&A for growth, without realizing the risk that is involved in the transaction. There is no single academic theory that encapsulates M&A activity and the drivers behind a company deciding to acquire a target, but there are many different theories that explain what the main motives for stakeholders, shareholders, or executives are for conducting M&A. Most executives use growth, synergy, or efficiency increases to justify the acquisition of companies. But sometimes executives can be the reason behind the acquiring firm losing value because of an acquisition, which is explained by the hubris theory of M&A. During the pandemic year of 2021, there was a clear increase in M&A activity both internationally and in the travel, leisure, and hotel (TLH) sector in the US. M&A in the US TLH sector increased by roughly threefold from 2020 to 2021. This supports the industry shock theory of M&A. After very lucrative and prosperous years before the pandemic in the tourism industry it can be assumed that firms in the industry had available capital, and due to interest being low at that time, a merger wave in the industry took place. The global tourism industry is still recovering from the effects of the Covid-19 pandemic which started in 2020, with international tourist arrivals in 2023 at 88% of pre pandemic numbers. However, the preliminary numbers for tourist visits to Iceland in 2023 point to Iceland having recovered almost fully, with 96% of pre-pandemic levels. This points to there being growth opportunities in the tourism sector globally, but less so in Iceland. Current forecasts state that the global tourism sector will recover fully in 2024, but that can be halted by economic factors such as inflation, and political factors such as wars in Europe, Africa, and the Middle East. Although 2020 and 2021 only had 27% and 31% of 2019’s international tourists, respectively, the average growth ...
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