The M&A (Mergers and Acquisitions) deal is an important corporate decision nowadays; both the number of global M&A deals and the total transaction value have dramatically increased.This work uses a sample of UK mergers and acquisition from 1985-2004 (inclusive), and shows that relative valuation between acquirers and targets appears to play an important role in explaining companies' acquisition behaviour. This work also uses various methodologies and consistently finds significant negative post-event long-term abnormal returns for acquiring firms and it provides additional empirical evidence regarding pre-bid abnormal returns for both acquiring firms and targets. The analysis should help shed some light on corporate M&A behaviour and its relation with capital market for both academic researchers and corporate financial managers.