The objective of the study is to analyse and compare the pre- and post-acquisitions financial performance of 50 Indian acquirers. The selected acquirers are publicly listed companies. The study has used the secondary data obtained from the financial statements.
The M&A for acquiring firms become questionable if the financial performance of the acquirers does not improve in the long run. This research study analyses the financial performance of M&A deals in respect of the publicly listed Indian acquirers using accounting ratios at three different levels: all deals, manufacturing industry and service industry. The deals taken for this study constitute 85% of the value of the M&A market for the period chosen between 2010 to 2014. The financial analysis has been compared for three years pre-and-post the deal. The data has been obtained from companies’ annual reports and online databases available in the public domain. The study leads to the conclusion that the acquirers failed to gain financially even after three years of the deal.
AggarwalP., & GargS. (2019). Impact of mergers and acquisitions on accounting-based performance of acquiring firms in India. Global Business Review, 23(1), 218–236. 10.1177%2F0972150919852009
2.
AgrawalA., JaffeJ., & MandelkerG. (1992). The post-merger performance of acquiring firms: A reexamination of an anomaly. Journal of Finance, 47(4), 1605–1621.
3.
AhsanF., FuadM., & SinhaA. (2021). Seeking strategic assets within cross-border acquisition waves: A study of Indian firms. Journal of International Management, 27(04).
4.
AhujaS. (1999, July10). Efficiency and market demand: Indian and foreign corporate sector in India. Economic and Political Weekly.
5.
AikN., HassanT., & MohamadS. (2015). Do Malaysian horizontal mergers and acquisitions create value?Global Business Review, 16(5), 15S–27S.
6.
AlloziN. M., & ObeidatG. S. (2016). The relationship between the stock return and financial, indicators (profitability, leverage): An empirical study on manufacturing companies listed in Amman Stock Exchange. Journal of Social Sciences, 5(03), 408–424.
7.
AnandanR., KumarA., KumraG., & PadhiA. (1998). M&A in Asia. The McKinsey Quarterly.
8.
AndreP., KooliM., & L’HerJ. (2004). The long run performance of mergers and acquisitions: Evidence from the Canadian stock market . Financial Management, 33(4, Winter), 27–43.
9.
AngwinD. (2020, January20). Success and failure in mergers and acquisitions (M&A). A Research Review for Midagon, 58(C), 650–699. https://www.midagon.com/wp-content/uploads/2020/11/Success-and-Failure-in-Mergers-and-Acquisitions-MA-A-Research-Review-for-Midagon.pdf
10.
BasuD., DastidarS. G., & ChawlaD. (2008). Corporate mergers and acquisitions in India: Discriminating between bidders and targets. Global Business Review, 9(02), 207–218.
11.
CapassoA., & MeglioO. (2007). The evolving role of mergers and acquisitions in competitive strategy research. https://ssrn.com/abstract=1015722.
12.
ClarkK., & OfekE. (1994). Mergers as a means of restructuring distressed firms: An empirical investigation. Journal of Financial and Quantitative Analysis, 29, 541–565.
13.
CollisJ., & HusseyR. (2014). Business research: A practical guide for undergraduate and postgraduate students. Palgrave Macmillan.
14.
CornettM., & TehranianH. (1992). Changes in corporate performance associated with bank acquisitions. Journal of Financial Economics, 31(2), 211–234.
15.
CoshA., HughesA., LeeK., & SinghA. (1989). Institutional investment, mergers and the market for corporate control. International Journal of Industrial Organization, 7(1), 73–100.
16.
CretinF., DieudonnéS., & BouachaS. (2015, September). M&A activity: Where are we in the cycle?https://caia.org/sites/default/files/AIAR_Q3_2015-07_M&A_CretinDieudonneBoucha.pdf
17.
DattaD., & GrantJ. (1990). Relationships between type of acquisition, the autonomy given to the acquired firm and acquisition success: An empirical analysis. Journal of Management, 16, 281–297.
18.
Dealogic. (2016). Key trends that shaped the markets in 2016. http://www.dealogic.com/insights/key-trends-shaped-markets-2016/.
19.
GoodM., & CampbellA. (1998). Harvard business review: Desperately seeking synergy. Harvard Business School Press.
20.
HalpernP. (1973). Empirical estimates of the amount and distribution of gains to companies in mergers. Journal of Business, 46, 554–575.
21.
HambrickD., ChoT., & ChenM. (1996). The influence of top management team heterogeneity on firm’s competitive moves. Administrative Science Quarterly, 41, 659–684.
22.
HartfordJ. (2003). Efficient and distortional components to industry merger waves. Journal of Financial Economics. http://dx.doi.org/10.2139/ssrn.388441
23.
HealyP., PalepuK., & RubackR. (1992). Does corporate performance improve after mergers?Journal of Financial Economics, 31(2), 135–175.
24.
HealyP., PalepuK., & RubackR. (1997). Which takeovers are profitable? Strategic or financial?Sloan Management Review, 45–57.
25.
HealyP., PalepuK., & RubackR. (1992). Does corporate performance improve after mergers?Journal of Financial Economics, 31(2), 135–175.
26.
HennartJ. F. (2001). Theories of the multinational enterprise. InOxford handbook of international business (pp. 127–149). Business Source Complete.
27.
HeronR., & LieE. (2002). Operating performance and the method of payment in takeovers. Journal of Financial and Quantitative Analysis, 37(1), 137–155.
28.
HittM. A., HoskissonR. E., IrelandR., & HarrisonJ. S. (1991). Effects of acquisition on R&D inputs and outputs. The Academy of Management Journal, 34(3), 693–706.
29.
HomburgC., & BuceriusM. (2005). A marketing perspective on mergers and acquisitions: How marketing integration affects postmerger performance. Journal of Marketing, 95–113.
30.
HoweJ., & MorillonT. (2020). Do mergers and acquisitions affect information asymmetry in the banking sector?Managerial Finance, 46(12), 1521–1547.
31.
HuY. (2009). The long-term performance of acquiring firms: Evidence from Chinese stock markets. Journal of International Business, 22, 66–83.
32.
IkedaK., & DoiN. (1983). The performances of merging firms in Japanese manufacturing industry: 1964–75. Journal of Industrial Economics, 31(3), 257–266.
33.
IsmailT., AbdouA., & MagdyR. (2011). Review of literature linking corporate performance to mergers and acquisitions. The Review of Financial and Accounting Studies, (01), 90–104.
34.
KalraN., GuptaS., & BaggaR. (2013). A wave of mergers and acquisitions: Are Indian banks going up a blind alley?Global Business Review, 14(2), 263–282. 10.1177/0972150913477470
35.
KarR. N., BhasinN., & SoniA. (2020). Role of mergers and acquisitions on corporate performance: Emerging perspectives from Indian IT sector. Transnational Corporations Review, 13(3).
36.
KooliC., & Lock SonM. (2021). Impact of COVID-19 on mergers, acquisitions & corporate restructurings. Businesses, 1, 102–114.
37.
KruseT. A., ParkH., ParkK., & SuzukiK. (2007). Long-term performance following mergers of Japanese companies: The effect of diversification and affiliation. Pacific-Basin Finance Journal, 15(2), 154–172.
38.
KukalisS. (2007). Corporate strategy and company performance: The case of post merger performance. The International Journal of Finance, 19(3), 4475–4489.
39.
LiY. (2021). Discussion on the performance of M&A transformation and upgrading in manufacturing enterprises—Taking hi future technology for example. Journal of Physics: Conference Series, 1865(4).
40.
MackenzieN., & KnipeS. (2006). Research dilemmas: Paradigms, methods and methodology. Issues in Educational Research, 16(2), 1–11.
41.
MantravadiD., & ReddyA. (2008). Post-merger performance of acquiring firms from different industries in India. International Research Journal of Finance and Economics, 22, 192–204.
42.
McGuckinR., NguyenS., & ReznekA. (1995, April). The impact of ownership change on employment, wages and labour productivity in US manufacturing 1977–1987 (Working Paper No. 95–8). Center for Economic Studies, US Bureau of the Census United States.
43.
MeeksG. (1977). Disappointing marriage: A study of the gains from merger. Cambridge University Press.
44.
MehrotraA., & SahayA. (2018). Performance of firms post mergers and acquisitions: A critical review. International Research Journal of Management Science & Technology, 9(1), 98–114.
45.
MehrotraA., & SahayA. (2018). Systematic review on financial performance of mergers and acquisitions in India. Vision, 22(2), 1–11.
46.
MuhammadH., WaqasM., & MiglioriS. (2019). The impact of M&A on bank’s financial performance: Evidence from emerging economy. Corporate Ownership & Control, 16(3), 52–63.
47.
PapadakisV. (2007). Growth through mergers and acquisitions: How it won’t be a loser’s game. Business Strategy Series, 8(1), 43–50.
48.
PawaskarV. (2001). Effects of mergers on corporate performance in India. Vikalpa, 26(1), 19–32.
49.
PowellR., & StarkA. (2005). Does operating performance increase post-takeover for UK takeovers? A comparison of performance measures and benchmarks. Journal of Corporate Finance, 11(1), 293–317.
50.
RahmanR., & LimmackR. (2004). Corporate acquisitions and the operating performance of Malaysian companies. Journal of Business Finance and Accounting, 31(3 and 4), 359–400.
51.
RamakrishnanK. (2008). Long-term post-merger performance of firms in India. Vikalpa, 33(2), 47–63.
52.
RaniP., ShaukiE. R., DarmintoD., & PrijadiR. (2020). Motives, governance, and long-term performance of mergers and acquisitions in Asia. Cogent Business & Management, 7(1).
53.
RanjuP., & MallikarjunappaT. (2019). Spillover effect of M&A announcements on acquiring firms’ rivals: Evidence from India. Global Business Review, 20(3), 692–707.
54.
RavenscraftD., & SchererF. (1989). The profitability of mergers. International Journal of Industrial Organisation, 7(1), 101–116.
55.
RavenscraftD., & SchererF. (1989). The profitability of mergers. International Journal of Industrial Organization, 7, 101–116.
56.
RayS., & GubbiS. (2009). International acquisitions by Indian firms: Implications for research on emerging multinationals. Indian Journal of Industrial Relations, 45(01), 11–26.
57.
ReddyK. S., NangiaV., & AgrawalR. (2013). Corporate mergers and financial performance: A new assessment of Indian cases. Nankai Business Review International, 4(2), 107–129.
58.
ReddyK., QamarM., & YahanpathN. (2019). Do mergers and acquisitions create value? The post-M&A performance of acquiring firms in China and India. Studies in Economics and Finance, 36(2), 240–264.
59.
ReusT., & LamontB. (2009). The double-edged sword of cultural distance in international acquisition. Journal of International Business Studies, 40(8), 1298–1316.
60.
SethA., SongK., & PettitR. (2000). Synergy, materialism or hubris? An empirical examination of motives for foreign acquisitions of US firms. Journal of International Business Studies, 31, 387–405.
61.
SharmaD., & HoJ. (2002). The impact of acquisitions on operating performance: Some Australian evidence. Journal of Business Finance and Accounting, 29(1–2), 155–200.
62.
SiebeckerM., & LozanoI. (2020). Cultural due dilligence and M&A in the wake of a pandemic. OSLJ Online, 81, 239–252.
63.
SinghF., & MoglaM. (2010). Profitability analysis of acquiring companies. The IUP Journal of Applied Finance, 16(5), 72–83.
Williamson. (1981). The economics of organization: The transaction cost approach. The American Journal of Sociology, 87(33).
70.
YehT.-M., & YasuoH. (2002). Productivity and operating performance of Japanese merging firms: Keiretsu-related and independent mergers. Japan and the World Economy, 14(3), 347–366.
71.
ZeitounH., NordbergD., & HombergF. (2019). The dark and bright sides of hubris: Conceptual implications for leadership and governance research. Leadership, 15(6), 647–672.
72.
ZuhriS., FahleviM., AbdiM. N., IrmaD., & MaemunahS. (2020). The impact of merger and acquisition on financial performance in Indonesia. Journal of Research in Business, Economics, and Education, 2(1), 326–338.
