Post‐merger corporate performance: an Indian perspective

Abstract

Purpose – The purpose of this paper is to examine the post‐merger operating performance of acquiring companies involved in merger activities during the period 1999‐2002 in India. It attempts to identify synergies, if any, resulting from mergers.Design/methodology/approach – This paper uses the operating performance approach, which compares the pre‐merger and post‐merger performance of companies using accounting data to examine merger related gains to the acquiring firms.Findings – It is found that the post‐merger profitability, assets turnover and solvency of the acquiring companies, on average, show no improvement when compared with pre‐merger values. So it seems that, contrary to common beliefs and expectations, mergers usually do not lead to improve the acquirer's financial performance.Research limitations/implications – Further studies may develop some alternate measures of merger‐related gains as financial measures have limitations to capture the full impact of merger on corporate performance. Moreov...