Academic journal article IUP Journal of Business Strategy

Focus

Academic journal article IUP Journal of Business Strategy

Focus

Article excerpt

In a highly competitive business environment, firms look for ways and means of growth through a variety of means. One such approach is through mergers and acquisitions (M&As). M&As are often viewed with multiple objectives in mind. To some firms, it is a way to access new markets, while for some, it may be a beginning point for new innovation opportunities. Some look at synergies with new partners, while some look at business consolidation. Not all M&As lead to positive outcomes though. Studies indicate that the so-called synergies do not pan out the way they were planned. The objective of building economies of scale too turns out to be a distant mirage. In acquisitions, results have shown that the acquirer has in most cases lost out on the deal because of the very high price paid to the gains accrued. The acquired company benefits on most counts. The first paper in this issue, "Mergers and Acquisitions: An Empirical Study on the Post- Merger Performance of Selected Corporate Firms in India", by Rosy Kalra, looks at the impact of M&As on firm's performance. The financial implications of M&As of 47 listed firms in India are presented. The impact on liquidity, profitability, operating performance and leverage of sample merged/acquirer companies is analyzed using appropriate tests. The results showed a significant improvement in the liquidity, profitability, operating performance and financial leverage for very few merged/acquirer firms.

In a competitive environment, some firms have shown how to profitably reinvent themselves. …

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