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Is M&A success decided before the deal goes through?

Westman, Bore LU and Mildenberger, Erik (2021) NEKN02 20211
Department 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)
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author
Westman, Bore LU and Mildenberger, Erik
supervisor
organization
course
NEKN02 20211
year
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}},
}