Merger and acquisition evaluation and decision making model

Wen-Shiung Lee

The Service Industries Journal, 2013, vol. 33, issue 15-16, 1473-1494

Abstract: Based on three merger and acquisition (M&A) methods and applying multiple-criteria decision making, the purpose of this paper is to establish an M&A evaluation model. The decision making trial and evaluation laboratory (DEMATEL) results show that the three business M&A methods possess interactive effect and self-feedback relationships. This study utilizes the analytic network process to calculate the weights of seven evaluation criteria; expected stock dividend is ranked as the most important criterion, followed by stock price/earnings per share, stock dividend growth, sales/market capitalization ratio, discount rate, replacement value, and liquidation value. This study uses Vlsekriterijumska Optimizacija I Kompromisno Resenje (VIKOR) to evaluate the performance of three Taiwanese banks. The results show that Bank B is the best M&A investment choice. Finally, the study establishes a comprehensive M&A decision making evaluation model.

Date: 2013
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DOI: 10.1080/02642069.2011.634905

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The Service Industries Journal is currently edited by Eileen Bridges, Professor Domingo Ribeiro, Ronald Goldsmith, Barry Howcroft and Youjae Yi

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