M&As and determinants of financial multiples in shipping: the European ro-pax and ferry market

G. Satta, F. Avallone, L. Persico, F. Parola, F. Vitellaro and C. Di Fabio

Maritime Policy & Management, 2024, vol. 51, issue 3, 461-483

Abstract: The paper investigates the determinants of M&As in the shipping industry by applying an original methodology paved on strategic management and financial perspectives. Despite the magnitude of the figures related to the financial deals and the potentially dramatic effects of M&As on the shipping industry, a literature gap persists in this business. No prior studies have theoretically and empirically addressed the determinants affecting the valuation process of target shipping companies. Therefore, financial multiples constitute a valuable method to address this topic. Given the relevance and size of the ro-pax and ferry market for the European maritime transport system as well as the increasing number of transactions, the paper investigates the determinants of the financial multiples in this market. The paper grounds on an original conceptual model that includes endogenous, exogenous, and transaction-related variables and proposes nine research hypotheses on endogenous variables. The hypotheses are empirically tested through ordinary least squares regression analysis on 85 M&As carried out in the 2005–2021 timeframe. The findings demonstrate differences between asset-side and equity-side multiples suggesting asset-side multiples are more suitable for pricing shipping companies. The paper adds extant academic literature by unveiling the principal endogenous variables that affect the due diligence of target ro-pax and ferry companies.

Date: 2024
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DOI: 10.1080/03088839.2023.2175271

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