To Clear or Not: Examination of Mergers and Acquisition Cases from Small Economies

Maharaj, Bobby; Reddy, Mahendra

doi:10.5539/ijef.v5n2p125

Cited by 4 publications

(3 citation statements)

References 9 publications

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“…The motivation of acquirers to obtain target resources and create synergies by combining them with their resources is well established in the literature (e.g., Maharaj & Reddy, 2013;Blonigen & Taylor, 2000). However, the evidence is mixed about the effects of target resources (King et al, 2008;Delios et al, 2009;Gubbi & Elango, 2016).…”

Section: H3: Target Resources Have a Positive Effect On Acquisition Smentioning

confidence: 99%

Which Is More Important to the Success of an Acquisition; Acquirer or Target Resources?

Genc

2020

bmij

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The resources of both acquirers and targets have been studied in terms of the drivers and success of acquisitions. Despite the large number of studies that have been conducted, we still do not know whose resources are more critical to the success of acquisitions. This study aims to examine the role of acquirer and target resources in the success of acquisitions. All acquisitions that took place in Turkey between 1990 and 2017 were analyzed to investigate the research question. The findings of a regression analysis of 425 acquisitions in this emerging market context reveal that acquirer resources are more critical than target resources in acquisition performance. The effects of resources on domestic and international acquisitions are also compared, and it is found that acquirer resources are more critical in domestic acquisitions, whereas target resources are more important in international acquisitions. The implications of these findings are discussed in terms of information asymmetry and post-acquisition integration issues, and directions for future research are suggested.

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Section: H3: Target Resources Have a Positive Effect On Acquisition Smentioning

confidence: 99%

Which Is More Important to the Success of an Acquisition; Acquirer or Target Resources?

Genc

2020

bmij

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“…Another financial indicator we wanted to examine is the administrative and staff expenses of the acquirer following an acquisition. One of the motivations of M&As is to create synergies in terms of costs (Maharaj and Reddy, 2013). The acquirer becomes a larger company following an acquisition, which helps the firm to become more efficient via economies of scale (Gupta and Gerchak, 2002).…”

Section: The Financial Outcomes Of Acquisitionsmentioning

confidence: 99%

What are the outcomes of emerging markets mergers and acquisitions Evidence from Turkey

Genc

Kalkan

2019

JGBA

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Emerging markets have become home to an increasing amount of acquisition activity. However, we do not know much about how domestic and international acquisitions differ in terms of their outcomes. The objective of this study is to compare these acquisitions in the context of an emerging country. To do so, we analysed all acquisitions that occurred in Turkey between 1989 and 2017. We found that domestic acquirers significantly outperformed foreign acquirers of Turkish companies. Our analysis of financial indicators suggests that foreign acquirers are larger in size, have greater leverage and intangibles, and engage in bigger deals. However, growth in leverage, capital expenditures, and administrative and staff expenses are greater in domestic acquirers. Overall, our findings suggest that domestic acquirers are affected more significantly by acquisitions compared to foreign acquirers and based on the financial outcomes of acquisitions there are several differences between these two groups of acquirers.

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“…In an increasingly competitive market, the corporate sectors in emerging countries are adopting a number of strategies to deal with raising efficiency and productivity. One such strategy is consolidation, that is, M&As (Maharaj and Reddy, 2013). One of the primary motives to undertake a merger is to gain the synergy that would accrue from more efficient management, economies of scale and scope, removal of duplication of resources, utilization of resources to their full potential and improved production techniques.…”

Section: Introductionmentioning

confidence: 99%

Merger, acquisition – right move or emotional move for growth – case study of sun pharmaceutical

Srivastava¹

2018

IJPHM

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Purpose The purpose of this paper is to analyze the merger and acquisition (M&A) strategy focusing on Indian company’s approaches and to understand steps of the process adopted by them. It focuses on the rationality of M&A and its impact on the profitability. This paper also discusses whether financial transaction in terms of value is right or done because of eagerness to expand by calculating the financial value of brand equity independently. Design/methodology/approach The operating performance, capital adequacy and solvency measures were compared to three-years pre- and post-merger from the financial statements of the organizations through financial valuation of brands. Inter-brand and RKS model are used to calculate the brand value. The perception study on M&A is also conducted by interviewing stakeholders. This paper provides a theoretical and practical basis to decide on whether M&A. The present paper has taken recent mega M&A of Ranbaxy Lab by Sun pharmaceuticals for the analysis. Findings The results of the paper showed that Return on investment did not indicate significant improvement, but on average, it can be concluded that overall performance of the acquirer improves as a result of M&A activity as per the study. The decisions on M&A are more emotional than rational. The present paper reveals that M&A of pharmaceutical company was riskier because of emotional decisions. Research has proposed “Merger, acquisition Theory (RERC MA theory) based on rational, emotion, risk taking ability culture” to understand the M&A. Research limitations/implications This paper is more focused on emerging markets which is more active with better gross domestic product (GDP) growth. It is more on analysis of financial decisions and has not taken customer equity, employee morale and engagement. A further study is suggested in the same areas. Managerial Implications: This paper will enable the managers to withstand the emotional influence and will help them to be more professional approach which will benefit the organization and stakeholder better. Mangers should look for long-term impact than short-term impact the present paper will also help them to understand on how financial calculations will help them to take more rational decisions. Originality/value Although the topic is not very new, a lot of literature is available on M&A, but the pharmaceutical sector is comparatively new for such kind of studies. Specifically, the selection of respondents and brand valuation mechanism has got practical implications. Earlier papers on M&A paper are more focused on customers’ equity, but a financial analysis of M&A is done in the present paper will help to evaluate merger and acquisition process more analytically. Financial calculation for evaluating M&A is the highlight of this research paper. Study of M&A from emerging markets will help to increase the knowledge as such papers are few. Research uses two important financial tools to measure financial brand equity and tries to justify the need for more rational rather than emotional approach. Research has proposed “Merger, acquisition Theory (RERC MA theory) based on rational, emotion, risk taking ability culture” to understand the M&A.

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To Clear or Not: Examination of Mergers and Acquisition Cases from Small Economies

Cited by 4 publications

References 9 publications

Which Is More Important to the Success of an Acquisition; Acquirer or Target Resources?

Which Is More Important to the Success of an Acquisition; Acquirer or Target Resources?

What are the outcomes of emerging markets mergers and acquisitions Evidence from Turkey

Merger, acquisition – right move or emotional move for growth – case study of sun pharmaceutical

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