Saboo, Sidharth and Gopi, Sunil (2009): Comparison of Post-Merger performance of Acquiring Firms (India) involved in Domestic and Cross-border acquisitions.
Download (137kB) | Preview
Mergers and acquisitions are used for improving competitiveness of companies and gaining competitive advantage over other firms through gaining greater market share, broadening the portfolio to reduce business risk, entering new markets and geographies, and capitalising on economies of scale etc. India has emerged as one of the top countries with respect to merger and acquisition deals. Indian companies have been actively involved in mergers and acquisitions in India domestically as well as internationally. The value share of deals where India has been a target or an acquirer has risen sharply over the past decade, from $2.2 billion in 1998 to $62 billion in 2007. As India increases its participation in M&A deals, it is instructive to compare the domestic and cross-border acquisitions due to their distinctiveness. The distinction between them is a function of the change in market integration which changes the costs and benefit structure and also the difference in synergies – social, cultural and organisational. This research study was aimed to study the impact of mergers on the operating performance of acquiring firms by examining some pre- merger and post-merger financial ratios of these firms and to see the differences in the pre merger and post merger ratios of the firms that go for domestic acquisitions and the firms that go for the international/cross-border acquisitions. The results suggest that there are variations in terms of impact on performance following mergers, depending on the type of firm acquired – domestic or cross-border. In particular, mergers have had a positive effect on key financial ratios of firms acquiring domestic firms while a slightly negative impact on the firms acquiring cross-border firms.
|Item Type:||MPRA Paper|
|Original Title:||Comparison of Post-Merger performance of Acquiring Firms (India) involved in Domestic and Cross-border acquisitions|
|Keywords:||Mergers and Acquisitions, Domestic Mergers, Cross-border Mergers, Operating performance|
|Subjects:||G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance
G - Financial Economics > G3 - Corporate Finance and Governance
|Depositing User:||Sidharth Saboo|
|Date Deposited:||13. Dec 2009 13:21|
|Last Modified:||07. Jan 2014 19:24|
 Boston Consulting Group research report, ‘The Brave new world of M&A – How to create value from Mergers and Acquisitions’, July 2007
 Pramod Mantravadi and A Vidyadhar Reddy, (2008): ‘Post-Merger Performance of Acquiring Firms from Different Industries in India’, International Research Journal of Finance and Economics ISSN 1450-2887 Issue 22 (2008)
 Ghosh, A., (2001): ‘Does operating performance really improve following corporate acquisitions?’ Journal of Corporate Finance 7 pp 151-178
 Weston, J.F., and S.K. Mansinghka, (1971): ‘Tests of the Efficiency Performance of Conglomerate Firms’, Journal of Finance, September, pp 919-936
 Marina Martynova, Sjoerd Oosting and Luc Renneboog, (2007): ‘The long-term operating performance of European Acquisitions, International Mergers and Acquisitions Activity since 1990: Quantitative Analysis and Recent Research’, G. Gregoriou and L. Renneboog (eds.), Massachusetts: Elsevier, pp 1-40.
 P. L. Beena, (2004): ‘Towards understanding the merger wave in the Indian corporate sector – a comparative perspective’, working paper 355, February, CDS, Trivandrum
 Timothy A. Kruse, Hun Y. Park, Kwangwoo Park, and Kazunori Suzuki, (2003): ‘Long-term Performance following Mergers of Japanese Companies: The Effect of Diversification and Affiliation’, presented at American Finance Association meetings in Washington D.C, pp 1-40
 Katsuhiko Ikeda and Noriyuki Doi (1983): ‘The Performances of Merging Firms in Japanese Manufacturing Industry: 1964-75’, The Journal of Industrial Economics, Vol. 31, No. 3, March, pp 257-266
 V. Pawaskar (2001): ‘Effect of Mergers on Corporate Performance in India’, Vikalpa, Vol.26, No.1, January – March, pp 19-32
 Michail, Pazarskis, Manthos Vogiatzogloy, Petros Christodoulou and George Drogalas (2006): ‘Exploring the Improvement of Corporate Performance after Mergers – The Case of Greece’, International Research Journal of Finance and Economics, Issue 6, pp 184-92. The Science Centre Berlin, Vol 24, Cambridge MA, Oelgeschlager, Gunn & Hain, pp 299-314
 Swaminathan, S (2002): ‘Indian M&As: Why They Have Worked So Far’, Indian Management, pp 72-77.