EFFECTS OF MERGERS AND ACQUISITIONS ON FINANCIAL PERFORMANCE OF THE TARGET COMPANY
Many studies revealed the fact that mergers and acquisitions are a risky business. Disregarding the M&A advisers’ fees, evaluations show that most of the companies completing M&A transactions disappoint to deliver on promised financial performance. But, as many would say, it is an investment...
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| Format: | Article |
| Language: | English |
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Nicolae Titulescu University Publishing House
2013-05-01
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| Series: | Challenges of the Knowledge Society |
| Subjects: | |
| Online Access: | http://cks.univnt.ro/uploads/cks_2013_articles/index.php?dir=2_Economic_Sciences%2F&download=cks_2013_economy_art_026.pdf |
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| author | ADRIANA DUŢESCU ANDREEA GABRIELA PONORÎCĂ GEORGIANA OANA STĂNILĂ |
| author_facet | ADRIANA DUŢESCU ANDREEA GABRIELA PONORÎCĂ GEORGIANA OANA STĂNILĂ |
| author_sort | ADRIANA DUŢESCU |
| collection | DOAJ |
| description | Many studies revealed the fact that mergers and acquisitions are a risky business. Disregarding the M&A advisers’ fees, evaluations show that most of the companies completing M&A transactions disappoint to deliver on promised financial performance. But, as many would say, it is an investment and the highest risks produce the highest results - whether they're good or bad. Within this paper, we were intending to analyse the rate of success of relevant M&A transactions that took place in 2007 in Romania, by comparing the financial statements of the target companies before and after the acquisition, in the current economic context. The main objective of this study is to generally determine the successfulness of the M&A transactions, starting from assessing changes induced by the M&A transaction to the target company, with the help of three important financial ratios: profit margin, ROE and receivable collection period. Even though the study may present some bias, we have tried to be as objective as possible and not influence its outcome: that 80% of 10 most important private Mergers and Acquisitions taking place in Romania in 2007 and that meet several conditions:
o The target is part of the consumer goods and services market (mainly trade and tourism) and is an important player in its industry
o The target is a Romanian private company, and its shares are not listed on the stock exchange
o The acquirer is majority shareholder after the transaction
The target company remained as a sole entity and was not integrated into the mother company after the transaction were not successful. |
| format | Article |
| id | doaj-art-b1fcecafa9be45eab73a243f9dde30e4 |
| institution | Kabale University |
| issn | 2068-7796 2068-7796 |
| language | English |
| publishDate | 2013-05-01 |
| publisher | Nicolae Titulescu University Publishing House |
| record_format | Article |
| series | Challenges of the Knowledge Society |
| spelling | doaj-art-b1fcecafa9be45eab73a243f9dde30e42025-01-02T06:33:14ZengNicolae Titulescu University Publishing HouseChallenges of the Knowledge Society2068-77962068-77962013-05-013-10411050EFFECTS OF MERGERS AND ACQUISITIONS ON FINANCIAL PERFORMANCE OF THE TARGET COMPANYADRIANA DUŢESCU0ANDREEA GABRIELA PONORÎCĂ1GEORGIANA OANA STĂNILĂ2Professor, Ph.D., Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, Bucharest (e-mail: adriana.dutescu@bsm-mba.ro).Lecturer, Ph.D., Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, Bucharest (e-mail: andreea.ase@gmail.com).Lecturer, Ph.D., Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, Bucharest (e-mail: gostanila@gmail.com).Many studies revealed the fact that mergers and acquisitions are a risky business. Disregarding the M&A advisers’ fees, evaluations show that most of the companies completing M&A transactions disappoint to deliver on promised financial performance. But, as many would say, it is an investment and the highest risks produce the highest results - whether they're good or bad. Within this paper, we were intending to analyse the rate of success of relevant M&A transactions that took place in 2007 in Romania, by comparing the financial statements of the target companies before and after the acquisition, in the current economic context. The main objective of this study is to generally determine the successfulness of the M&A transactions, starting from assessing changes induced by the M&A transaction to the target company, with the help of three important financial ratios: profit margin, ROE and receivable collection period. Even though the study may present some bias, we have tried to be as objective as possible and not influence its outcome: that 80% of 10 most important private Mergers and Acquisitions taking place in Romania in 2007 and that meet several conditions: o The target is part of the consumer goods and services market (mainly trade and tourism) and is an important player in its industry o The target is a Romanian private company, and its shares are not listed on the stock exchange o The acquirer is majority shareholder after the transaction The target company remained as a sole entity and was not integrated into the mother company after the transaction were not successful.http://cks.univnt.ro/uploads/cks_2013_articles/index.php?dir=2_Economic_Sciences%2F&download=cks_2013_economy_art_026.pdfmergers & acquisitionsfinancal performancefinancial ratioslisted companies |
| spellingShingle | ADRIANA DUŢESCU ANDREEA GABRIELA PONORÎCĂ GEORGIANA OANA STĂNILĂ EFFECTS OF MERGERS AND ACQUISITIONS ON FINANCIAL PERFORMANCE OF THE TARGET COMPANY Challenges of the Knowledge Society mergers & acquisitions financal performance financial ratios listed companies |
| title | EFFECTS OF MERGERS AND ACQUISITIONS ON FINANCIAL PERFORMANCE OF THE TARGET COMPANY |
| title_full | EFFECTS OF MERGERS AND ACQUISITIONS ON FINANCIAL PERFORMANCE OF THE TARGET COMPANY |
| title_fullStr | EFFECTS OF MERGERS AND ACQUISITIONS ON FINANCIAL PERFORMANCE OF THE TARGET COMPANY |
| title_full_unstemmed | EFFECTS OF MERGERS AND ACQUISITIONS ON FINANCIAL PERFORMANCE OF THE TARGET COMPANY |
| title_short | EFFECTS OF MERGERS AND ACQUISITIONS ON FINANCIAL PERFORMANCE OF THE TARGET COMPANY |
| title_sort | effects of mergers and acquisitions on financial performance of the target company |
| topic | mergers & acquisitions financal performance financial ratios listed companies |
| url | http://cks.univnt.ro/uploads/cks_2013_articles/index.php?dir=2_Economic_Sciences%2F&download=cks_2013_economy_art_026.pdf |
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