Synergistic Gains from Mergers
Dr Anjala Kalsie and
Dr Shikha Mittal Shrivastav
- Assistant Professor, Faculty of Management Studies, University of Delhi, Delhi
- Assistant Professor, IILM Graduate School of Management, Greater Noida, Uttar Pradesh
The objective of the paper is to study the operating
and profitability performance achieved as synergy
gains after merger and acquisitions (M&As). To
examine the synergy gains in pre and post merger,
this paper uses a sample of 15 Domestic Inbound
M&A deals carried out between 2008 and
2016. For measuring Operating Performance
four ‘Management Efficiency Ratios were used,
viz., the Fixed Asset Turnover Ratio, Inventory
Turnover Ratio, Debtors Turnover Ratio and
Interest Cover Ratio’. For measuring Profitability,
seven profitability ratios were used namely ‘Profit
Before Interest Depreciation and Tax Margin
(%), Profit Before Interest and Tax Margin (%),
Profit Before Depreciation and Tax Margin
(%), Cash Profit Margin (%), After Tax Profit
Margin (%), Return on Capital Employed (%)
and Return on Net Worth (%)’ were considered.
The data for the same is collected from Venture
Intelligence and Capital Line (C-MOTS
Infotech). The said objective is achieved via Logit
Panel Data. The results of Panel Logit Model
indicate that Operating Performance Ratios –
‘Fixed Asset turnover ratio and Debtors turnover
ratio’ are statistically significant with the merger
and acquisition activity. Profitability Ratios – 'PBIDTM (%) PBITM(%), PBDTM(%), CPM(%), RONW(%) and
APATM ratios are statically significant with the merger and acquisition activity.
Operating Synergies, Profitability Synergies, Logit Panel, Inbound M&A
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