Mergers and Economic Performance (original) (raw)

Effects of Mergers and Acquisitions on Financial Performance of the Target Company

2013

Many studies revealed the fact that mergers and acquisitions are a risky business. Disregarding the M&A advisers' fees, evaluations show that most of the companies completing M&A transactions disappoint to deliver on promised financial performance. But, as many would say, it is an investment and the highest risks produce the highest results-whether they're good or bad. Within this paper, we were intending to analyse the rate of success of relevant M&A transactions that took place in 2007 in Romania, by comparing the financial statements of the target companies before and after the acquisition, in the current economic context. The main objective of this study is to generally determine the successfulness of the M&A transactions, starting from assessing changes induced by the M&A transaction to the target company, with the help of three important financial ratios: profit margin, ROE and receivable collection period. Even though the study may present some bias, we have tried to be as objective as possible and not influence its outcome: that 80% of 10 most important private Mergers and Acquisitions taking place in Romania in 2007 and that meet several conditions: o The target is part of the consumer goods and services market (mainly trade and tourism) and is an important player in its industry o The target is a Romanian private company, and its shares are not listed on the stock exchange o The acquirer is majority shareholder after the transaction The target company remained as a sole entity and was not integrated into the mother company after the transaction were not successful.

Review of Literature Linking Corporate Performance to Mergers and Acquisitions

2009

There are inconclusive results on the literature on the consequences of mergers and acquisitions (M&A) on corporate performance as well as factors that might affect such identify synergies. This paper aims at synthesizing and analyzing prior literature of mergers and acquisitions and its effects on the financial performance in an attempt to determine factors that might influence post-mergers and acquisitions performance. Previous studies are using varieties of measures to examine the impact of M&A on corporate performance, where measures might be accounting measures-based, market measures-based, mixed measures, or qualitative measures-based. This study concluded that there is a dispute regarding the factors that affect the reported performance, where eight factors might affect performance as follows: (1) method of payment (Cash or Stock), (2) book to market ratio, (3) type of merger or acquisition transaction (related or unrelated), (4) cross-border versus domestic M&A, (5) mergers versus tender offers, (6) firm size, (7) macro economic conditions, and (8) time period of transaction. Managers should be aware of such factors and their impact on post-merger/acquisition corporate performance to accurately evaluate proposed offers of mergers and acquisitions and take sound decisions.

Comparative Effects of Mergers and Acquisitions on the Companies’ Financial Performance

Russian Journal of Agricultural and Socio-Economic Sciences, 2018

This study aims to determine the comparative financial performance of companies before and after mergers and acquisitions. Company performance is measured by using financial ratios, namely: current ratio, total asset turnover, debt to equity ratio and net profit margin. While the object of this study include eleven manufacturing companies listed on the Indonesia Stock Exchange (BEI) in the period of 2009-2013 that once conducted mergers and acquisitions. Data analysis method used is quantitative method, using SPSS 21 with the Kolmogorov-Smirnov normality test, Wilcoxon signed rank test and paired sample t-test. Paired sample t-test on CR and DER ratios differ two years and three years before and after merger acquisition and three years before and three years after mergers and acquisitions, while TATO is different two years before and three years after mergers and acquisitions. However, NPM did not differ in all observation periods.

Mergers & Acquisition and Firm Performance: Evidence from the

2016

Firm growth, improved efficiency and profitability are among the key benefits sought from mergers and acquisitions (M&A). This study is a modest attempt to seek for the effects M&As on the performance of firms in the Ghanaian Stock Market from 1999 to 2010. The study was accounting based and used univariate analysis with T-testing as well as panel data methodology for the analysis. The univariate analysis revealed dwindling profitability after the merger for all the firms with the t-test showing significant difference in profitability before and after merger. The evidence from panel methodology indicates that M&A has significant negative effect on the profitability of firms. It is therefore imperative that M&As are properly planned, executed and evaluated. Specifically, efforts should be made to attract and retain key personnel of the merged firms through performance contracts or bonuses, proper conflict resolution measures should be put in place and conscious effort made to reap th...

Mergers and acquisitions: A comparative review of literature

Industrija, 2016

The paper aims to review scholastic research on the effect of M&As on firm performance and present a comparative analysis of Indian M&As visa-vis those occurring in other nations. 108 articles in referred journals published between 2005 and 2015 have been surveyed with a focus on comparing firm performance parameters prior and post the M&A. Firm performance has been inspected via three measures i.e. accounting measures, stock market performance measures and qualitative measures. On the basis of these three measures, literature on mergers in India with those occurring in another 23 countries was compared. The review has shown that irrespective of the nation, M&As may impact the accounting and stock market performance measures of the acquirer and target firms in a positive, negative or mixed manner. M&As in nations other than India have received more academic attention with respect to the effect on qualitative issues like cultural compatibility, downsizing and innovation. Cultural incompatibility and downsizing are problems of M&As in India as well as other nations. Indian domestic M&As have resulted in greater market share whereas majority of the M&As in other nations have lost customer base. Although literature studying the outcomes of M&As on firm performance from a pre-post perspective are multifarious, a comparative assessment of the studies on M&As occurring in India with those carried out in other nations of the world is a novel attempt.

Effect of Merger and Acquisition on the Financial Performance of the Firms

2018

To keep the head high in globalized economy one has to follow the path of growth, which contains various challenges and issues; one has to overpower these challenges and issues to become a success story. Business is one of the oldest professions that mankind possesses, as time passed and with the advent of technology the earth seemed to squeeze, distances started to minimize, the age of globalization had begun. In the last decade, businesses from developing countries have started to buy out businesses of developed countries as their economies are doing better compared to the developed world due to low cost of production. The process of mergers and acquisitions has gained substantial importance in today's corporate world. This process is extensively used for restructuring the business organizations. In India, the concept of mergers and acquisitions was initiated by the government bodies. Some well known financial organizations also took the necessary initiatives to restructure th...

Mergers and acquisitions’s impact on financial performance: an evaluation with perspective of time

Journal of Fundamental and Applied Sciences, 2018

Mergers and Acquisitions (M&A) is the most prefered technique of the corpoates from diversed areas across the globe for achieiving inorganic growth. In Indian context, M&A has a graceful history from pre liberalization to post librelization period wherein the companies have used this process in different scenarios to accomplish various objectives. Though this method have enormous benefits but at the same time are firms are able to convert these qualitative aspects into quantitative form and if yes than do they see an immediate impact or it takes considerable time to reflect same in their financial performance. The present research work with the help of Du Pont Return on Assets (ROA) framework assess the success of M&A in the long run by taking a sample of 24 companies that have acquired companies in financial year 2005-2006.

The impact of Merger and Acquisitions on firm performance

Purpose: The purpose of this study was to establish the impact of merger and acquisition (M&A) on firm performance in East Africa. Methodology: We employed an event study to calculate the cumulative abnormal returns to evaluate M&A performance and shareholder wealth. We also used accounting ratio-Return on Equity to evaluate firm performance. Our dataset consists of 330 observations of 234 M&A deals that occurred in a period of 2005 to 2015, using secondary data of publicly listed firms on the various East African States stock exchange markets. All the data used was obtained from Zephyr for the deals and the stock values data was from Thomson one database (DataStream). Findings: We find that mergers and acquisitions are significantly associated with firm performance. Results further indicate that M &A announcements generate significant abnormal returns to the firm's shareholders and also, there is a positive relationship between the domestic M&A deals and firm performance. Further, there is a positive relationship between cross boarder M & A deals and firm performance and domestic merger and acquisition deals perform better than the cross border M&A deals in improving firm performance. Originality: The research gives an insight on how domestic Merger and Acquisition deals perform relative to cross border M&A deals in East Africa and how merger and acquisition can improve firm performance. The East African region has recently had some of the fastest growing M&A activities on the African continent. Thus, this study contributes to the existing literature on the effect of merger and acquisition on firm performance using evidence from the entire East African region. Further, this study is of value to the East African Community in regards to evaluating its objectives on regional economic growth through M&A influence and also driving positive business and logical decisions on M&A activities in the East African region.

The Effect of Mergers and Acquisitions on the Technological Performance of Companies in a High-tech Environment

Technology Analysis & Strategic Management, 2002

A large part of the literature from industrial organisation and management expects that, compared with unrelated M&As, related M&As show superior economic performance because of synergetic effects that follow from economies of scale and scope. The current contribution takes the debate on the effect of different M&As somewhat further by studying the effect of M&As on the technological performance of companies. In this study the technological performance of M&As is related to a high-tech sector, i.e. the computer industry. The main result of this research is that the so called strategic and organisational fit between companies involved in M&As seem to play an important role in improving the technological performance of companies (mergers, acquisitions, technological performance) have put this topic on the research agenda.

1THE Effect of Mergers and Acquisitions on the Technological Performance of Companies in a High-Tech Environment

2000

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