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Firms have many corporate strategies, one of which is to diversify their operations through a merger or acquisition (M&A). The hope is that by diversifying, firms will gain value through operational and financial synergies, increase market power, decrease competition, and align managerial incentives. However, past studies found that firms experience a phenomenon called the “diversification discount,” where firm value may decrease. Using a panel of 1,133 M&A transactions from 2000-2010, the results of this paper indicate that previously diversified firms are more likely to pursue further diversifying activities, but less likely to pursue similar targets. Furthermore, we do not find a discount associated with diversifying activities per se, but rather a premium associated with smaller transactions. This suggests that while diversification is necessary to explain firm value, it is not sufficient.