Post-acquisition performance of emerging market firms: A multi-dimensional analysis of acquisitions in India
M&A performance is a multifaceted, compound construct with no overarching factor that captures all different dimensions. This paper examines the concept of acquisition performance and proposes a model that links firm-level factors and transaction parameters with firms' short-term and long-term performance, extending to financial-, market- and innovation measures. Building on past empirical studies on the influence of various factors on M&A performance, a multi-dimensional structural equation model has been developed and it has been tested with a dataset on acquisitions in the Indian technology sector over a period of ten years. The results suggest that: (a) smaller acquirers with higher book value and leveraged firms demonstrate better long-term performance; (b) contrary to established understanding, short-term market returns are not influenced by deal parameters; (c) majority stake purchases show relatively lesser gains-suggesting the possible presence of post-acquisition integration issues and, (d) acquirers with high intangible assets continue to do well on innovation performance post-acquisition. By indicating situations and conditions under which an acquisition would potentially lead to a performance gain for the acquirer, these results provide significant insight to practitioners pursuing M&As for growth opportunities.
Year of publication: |
2021
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Authors: | Das, Arindam |
Published in: |
Journal of Risk and Financial Management. - Basel : MDPI, ISSN 1911-8074. - Vol. 14.2021, 12, p. 1-18
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Publisher: |
Basel : MDPI |
Subject: | mergers and acquisitions | firm performance | structural equation modeling | emerging markets |
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