Post-Acquisition Performance of Emerging Market Firms: A Multi-Dimensional Analysis of Acquisitions in India

Arindam Das

JRFM, 2021, vol. 14, issue 12, 1-18

Abstract: M&A performance is a multifaceted, compound construct with no overarching factor that captures all different dimensions. This paper examines the concept of acquisition performance and proposes a model that links firm-level factors and transaction parameters with firms’ short-term and long-term performance, extending to financial-, market- and innovation measures. Building on past empirical studies on the influence of various factors on M&A performance, a multi-dimensional structural equation model has been developed and it has been tested with a dataset on acquisitions in the Indian technology sector over a period of ten years. The results suggest that: (a) smaller acquirers with higher book value and leveraged firms demonstrate better long-term performance; (b) contrary to established understanding, short-term market returns are not influenced by deal parameters; (c) majority stake purchases show relatively lesser gains—suggesting the possible presence of post-acquisition integration issues and, (d) acquirers with high intangible assets continue to do well on innovation performance post-acquisition. By indicating situations and conditions under which an acquisition would potentially lead to a performance gain for the acquirer, these results provide significant insight to practitioners pursuing M&As for growth opportunities.

Keywords: mergers and acquisitions; firm performance; structural equation modeling; emerging markets (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2021
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