The Effect Of Mergers And Acquisitions On Shareholder Returns

This study analyzes the effect of changes in corporate control on the way shareholders benefit from the announcements of selling and buying airlines, thus contributing to the literature on mergers and acquisitions (M&As) in emerging markets. Using a methodology of event study, including GARCH and OLS models, we find evidence that some selling companies obtain abnormal returns that are statistically significant after the announcement of the M&A. However, when the merger is not strategic, the companies present statistically significant negative abnormal returns. The results are not conclusive when analyzing the effect on the value of the buying companies.

A step-by-step guide to doing the deal, this text covers everything from identifying the target to managing integration. Real-world examples from successful, unsuccessful, and abandoned deals help illustrate every step of the process.

Bachelor Thesis from the year 2021 in the subject Business economics - Review of Business Studies, grade: 1,0, LMU Munich (Institute for Capital Markets and Corporate Finance), course: Bachelor Thesis, language: English, abstract: This bachelor thesis sets out to investigate whether the observed past and present effects of M&A deal announcements on target and acquirer cumulative abnormal returns (CARs) to shareholders, also occur on an industry-specific level in the U.S. Technology, Media & Telecommunications (TMT) industry, and over time by reviewing three distinct time frames between 2000 and the end of 2019. This thesis emphasizes “mega-deals”, which are M&A transactions with values greater than or equal to USD 500m. The recentness of the data and the emphasis on deal-value and industry-specific M&A deals make these findings unique. The event study method is applied to examine the concrete effects that an event, an M&A deal announcement, exerts on acquiring and target firm stock returns. Hereby, the difference between the actual stock returns–which occur due to the event–and the expected stock returns is analyzed and subsequently tested for significance. The main and null hypothesis of this thesis is that M&A deal announcements have no effect on the average of the stock returns of acquiring and target firms. A frequently studied area and old research question of corporate finance, ever since its initial inception in the 1960s, is the effect of mergers and acquisitions (M&As) on the wealth of shareholders of the acquiring and target companies. As recently as the early 2010s, a near-universal consensus amongst research and business press has existed, that M&As tend to generate little to no shareholder value for acquiring firms, while target shareholders incur significant returns. These findings draw on the theory of market efficiency and rational expectations to assume that such changes to the stock prices, abnormal returns (ARs), reflect the discounted value of expected future profits, i.e. cash-flows and rapidly price-in new publicly disclosed information, such as a merger announcement. Since 2012, however, a novel strand of research has emerged which has observed these previously low ARs for acquiring shareholders becoming on average significantly positive for the first time in history on a global scale following the Great Financial Crisis (GFC). This is attributable to an ensuing overall improvement to corporate governance frameworks and M&A dealmaking. Markedly, this trend was later found to start reversing back to previous pre-GFC levels.

In a business climate marked by escalating global competition and industry disruption, successful mergers and acquisitions are increasingly vital to the growth and profitability of many corporations. If history is any guide, 60 to 70 per cent of new mergers will fail – and will destroy shareholder value. To date, analyses of the M&A failure rate tend to focus on individual causes – e.g., culture clashes, valuation methods, or CEO overconfidence – rather than examining the problem holistically. The Value Killers is the first book based on a holistic analysis of successful and unsuccessful transactions. Based on research, interviews with top executives, and case studies, this book identifies the key causes of failures and successes and offers prescriptions to increase the odds that future transactions will deliver all the anticipated synergies. The Value Killers offers practical advice in the form of 5 Golden Rules. These rules will help managers and boards to ensure that target companies are properly valued; potential synergies and risks are identified in advance; checks and balances are installed to make sure that the pros and cons of the transaction are rationally and objectively evaluated; mechanisms are created that will trigger termination of bad deals; and obstacles to successful post-merger integrations are assessed (and solutions developed) before the deal closes. Each chapter includes questions for executives considering future M&As to allow them to see whether they are on the right track or not.

Bachelor Thesis from the year 2005 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 2,3, Northumbria University (Newcastle Business School), language: English, abstract: Mergers and Acquisitions (M&A) are some of the dominant topics of the economy today, because such a step has big influence on the companies’ development, the location, the employees and the other stakeholders. Such activities are seen as an instrument of the development of a company since a long time. Companies act or respond with it on competitive situations. The market for M&A expels in high volumes year by year therefore the interest of the public is accordingly big. The shareholders and the management of the individual companies play a very big role on that occasion. They make the decision for or against a merger and they are also the ones who will earn profits from such a union, or suffer also damage in the case of doubt through it. In order to find a solution of this problem, one needs a structured action and a lot of information. This work deals intensively with the topic of Mergers & Acquisitions and explains on the basis of two examples the possible development. On this occasion, it was distinguished from takeovers also between two different forms; the friendly merger and the hostile takeover. An especially big hurdle on the way to the new company represents the restructuring and integration of the acquired business into existing structures. Therefore one aim of this work is to show different possibilities of an after-merger-development; for example with Shareholder-Value-Strategies. Since this is often interconnected with enormous expenditure and high costs, this study deals with the possible consequences for shareholders and management, not only positive but also negative ones.

This set includes articles from the four main fields which have influenced the study of Mergers and Acquisitions: Economics, Finance, Strategic Management and Human Resource Management. Featuring the key papers by individuals who shaped the field, the collection presents these formative pieces in thematically grouped sections, including coverage of: * Perspectives on the modern business corporation and the role of mergers and acquisitions: historical, financial, strategic and management * Causes of mergers and acquisitions activity * Performance impact of mergers and acquisitions activity * Public policy and the corporation The set features a comprehensive index and original introductory material.