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The Impact of Merger and Acquisition on Value Creation: An Empirical Evidence
Amity University, Noida, India.
Amity University, Noida, India.ORCID iD: 0000-0001-9725-9761
Indian Institute of Management, Shillong, India.
2021 (English)In: The Importance of New Technologies and Entrepreneurship in Business Development: In The Context of Economic Diversity in Developing Countries, Cham: Springer, 2021, p. 1435-1456Chapter in book (Refereed)
Abstract [en]

The aim of this paper is to examine the impact of post merger and acquisitions on value creation. The paper also analyses the impact of lagged synergy (a proxy of sales growth) on the post merger and acquisition (M&A) performance of acquiring firms. The study employs System Generalised Method of Moment model (System GMM) to the panel dataset of 64 Indian firms from 2012 to 2018 to determine the synergy impacts and value creation post merger and acquisition (M&A). The outcome of the study signs that mergers create positive value for post merger acquiring firms, and lagged synergy influences future synergies positively. The lagged dependent variable synergy (p-value is 0.000) shows a significant positive effect on dependent variable synergy, which indicates that previous year sales of the firm have a positive effect on future year sales. If the acquisition of firm post merger and acquisition (M&A) effectively absorbs acquired firm resources and digests nutrition from those resources, then the value can be created, and synergy can be achieved, or at least not damaged. Corporate managers, policy makers and regulators can lure significant conclusions from the outcomes of the study. This study for managers concludes that a strong view of possible synergies that can be accomplished through mergers, timelines and processes to achieve them, all of which will aid in the post merger integration process. This knowledge and understanding also helps to optimise the effect of lagged synergies. The results have also important consequences for academics and give impetus to further research. Future research can be undertaken by comprising premiums paid, cross borders mergers, hostile or friendly mergers that may shed some supplementary insights. This paper contributes to value addition in the literature of post M&A as it analyses value creation and effect of lagged synergy in terms of sales. There are limited studies that observed the relationship of value creation and merger and acquisition (M&A), especially in the context of Indian sectors; moreover, this paper takes into consideration different sectors viz. Manufacturing, Mining, Electricity, Construction, Service and Real Estate which gives a holistic view of Indian sectors.

Place, publisher, year, edition, pages
Cham: Springer, 2021. p. 1435-1456
Keywords [en]
Merger and Acquisition (M&A), Synergy, Value creation, Generalised Method of Moment (GMM), Research & Development (R&D)
National Category
Business Administration
Identifiers
URN: urn:nbn:se:liu:diva-181551DOI: 10.1007/978-3-030-69221-6_107Libris ID: 2fxb8z040d1lqq8hISBN: 9783030692216 (electronic)ISBN: 9783030692209 (print)OAI: oai:DiVA.org:liu-181551DiVA, id: diva2:1615861
Available from: 2021-12-01 Created: 2021-12-01 Last updated: 2021-12-09Bibliographically approved

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Citation style
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