This paper investigates the determinants of European cross-border M&Amp;As using a large database. Specifically, we identify some of the different factors which contribute to the efficiency of the firms and divide these into two groups:

• those which can be changed through a merger or acquisition and

• those which cannot be altered and are more related to the environment where the acquired firm is established.

Using a gravity model we find evidence for both of what have become to be known as the governance and outcome hypotheses. Additionally, we do not find any supporting evidence for more intense M&Amp;A activity between euro-zone countries.