A Study on Analysing Indian Mergers and Acquisitions and its Impact on Financial Performance of Selected Corporates in India

Abstract

quot newlineMerger and acquisitions are one of the most popular strategic decisions indulged by corporates in India. Thus, how fruitful or otherwise are these deals for acquiring companies is needed to be analysed. The first angle of the study, attempts to find out the impact of merger and acquisitions on the financial performance of selected companies who have undertaken mergers and acquisitions during the years of 2000 to 2012. The performance of companies in pre and post merger period has also been compared with the peer group companies through the use of industry adjusted variables. Tools like Wilcoxon Signed Rank Test, Kruskal Wallis Test, ANCOVA Dummy Variable model and multiple regression model has been used to support the analysis. The second angle is to find out if the merger has helped in increasing the long run abnormal returns of shareholders (through CAR and BHAR) in the post 12, 24 and 36 months and comparing the same with pre 12, 24 and 36 months respectively using a paired t-test. The third angle tries to examine if the timing of the merger that is in what economic circumstances the merger has taken place have an impact on operating performance through a panel regression model. The study finds that over all, mergers slows the growth rate of operating performance post the merger as compared to its industry counterparts, significantly slows the long run CAR and BHAR and the operating performance is influenced by macro economic factors as there is a significant impact of returns on stock index on post merger operating profit margins.quot newline newline