Is M&A success decided before the deal goes through?
(2021) NEKN02 20211Department of Economics
- Abstract
- The aim of this paper is to contribute to the ongoing discussion about M&A performance and the impact pre-merger characteristics have on post-merger performance for the acquiring firm. The study is limited to acquisition deals that occurred in 2014 and the acquiring firm being located in the EU-15 area. Using the quantitative indicators method, econometric models were performed to measure the impact of nine separate accounting-based factors on post-merger performance. This thesis suggests a new method of using the performance measure return on assets. Instead of having a fixed time period used for all deals, using a five year average ROA reduces time dependent fluctuations and allows for different post-merger integration time frames. The... (More)
- The aim of this paper is to contribute to the ongoing discussion about M&A performance and the impact pre-merger characteristics have on post-merger performance for the acquiring firm. The study is limited to acquisition deals that occurred in 2014 and the acquiring firm being located in the EU-15 area. Using the quantitative indicators method, econometric models were performed to measure the impact of nine separate accounting-based factors on post-merger performance. This thesis suggests a new method of using the performance measure return on assets. Instead of having a fixed time period used for all deals, using a five year average ROA reduces time dependent fluctuations and allows for different post-merger integration time frames. The results present us with insights that support that R&D intensity has a positive effect on post-acquisition performance, in particular for cross-industry deals. Furthermore, log revenue and inventory intensity seem to have negative and significant effects on predicted performance, even when controlling for industry, country, cross-border and cross-industry deals. Interaction variables also implies that larger acquirer firms tend to perform worse in cross-industry deals and that high R&D intensity leads to better cross-border post-acquisition performance. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9053136
- author
- Westman, Bore LU and Mildenberger, Erik
- supervisor
- organization
- course
- NEKN02 20211
- year
- 2021
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- M&A, Success, Acquisitions, Performance, EU-15, Accounting, ROA, R&D
- language
- English
- id
- 9053136
- date added to LUP
- 2021-10-26 08:18:47
- date last changed
- 2021-10-26 08:18:47
@misc{9053136, abstract = {{The aim of this paper is to contribute to the ongoing discussion about M&A performance and the impact pre-merger characteristics have on post-merger performance for the acquiring firm. The study is limited to acquisition deals that occurred in 2014 and the acquiring firm being located in the EU-15 area. Using the quantitative indicators method, econometric models were performed to measure the impact of nine separate accounting-based factors on post-merger performance. This thesis suggests a new method of using the performance measure return on assets. Instead of having a fixed time period used for all deals, using a five year average ROA reduces time dependent fluctuations and allows for different post-merger integration time frames. The results present us with insights that support that R&D intensity has a positive effect on post-acquisition performance, in particular for cross-industry deals. Furthermore, log revenue and inventory intensity seem to have negative and significant effects on predicted performance, even when controlling for industry, country, cross-border and cross-industry deals. Interaction variables also implies that larger acquirer firms tend to perform worse in cross-industry deals and that high R&D intensity leads to better cross-border post-acquisition performance.}}, author = {{Westman, Bore and Mildenberger, Erik}}, language = {{eng}}, note = {{Student Paper}}, title = {{Is M&A success decided before the deal goes through?}}, year = {{2021}}, }