Mergers and Acquisition (M&A) refer to activities involving the amalgamation of companies for the purpose of gaining better competitive edge, realization of economies of scale or to penetrate new selling zones. In this article, we propose to analytically measure the motives, tactics, and performance of M&As; using a large set of 300 transactions worldwide for 2019 and 2023. The methodology consists of quantitative data analysis with statistical regression of the value of financial performance indicators before and after the acquisition (ROI, EBITDA) and qualitative data collection based on a survey of 50 top-level managers of corporations. Findings of the study suggest that roughly two thirds of acquisitions led to enhanced financial performance as reflected by an average ROI uplift of 12% in the period up to 2 years post-merger. Further, at the second level of analysis, we found that M&As with operational synergy scores ranked high are significantly associated with high success rates with 70% of total mergers achieving high synergy ratings. In addition, the studies showed that acquisitions for market growth were 15% more likely to succeed than those for cost saving. As such, these results stress the importance of strategic direction and execution coordination for M&A performance, which can be helpful for practitioners that seek to achieve better results in potential subsequent M&A.
Keywords
Mergers and Acquisition, Financial Performance Metrics, Competitive Advantage, Motivations of M&A, M&A Transactions, Market Competition and Expansion, Motivations for Divestitures.
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Yun Cai
Yun Cai
School of Environmental and Chemical, Shanghai University, Bao Shan Qu, Shang Hai Shi, China, 200444.
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Cite this article
Yun Cai, “Empirical Insights into Mergers and Acquisitions through Quantitative Evaluation of Motivations, Strategies and Outcomes”, Journal of Enterprise and Business Intelligence, vol.4, no.1, pp. 001-011, January 2024. doi: 10.53759/5181/JEBI202404001.
