iterature review of Xiao Chen
Merger & acquisition (M&A) is an activity that made by the company to takeover or merge with other companies. Acquisition, also known as a takeover, is the buying of one company (the ‘target’) by another, while a merger is a combination of two companies into one larger company.
When company carry out a M&A deal, the manager will provide a rationale of why the company want to carry out a certain M&A deal and an expectation on the synergy and benefit of the M&A deal in the press release. In the press release, the manager mainly uses positive words or sentence to express the high positive expectation on the performance of M&A deal. However, the reality is that between 70% and 90% of M&As are not successful (Martin 2016), in that the completed M&A transaction is negative to the acquirer (the benefit the company receives cannot cover the price it paid). Therefore, manager tends to be …show more content…
Performance of M&A
The definition of performance of M&A is a question that has been studying by researcher for a long time, several studies tried to answer this question but their findings are not consistent. Zollo and Meier (2008) provide that there are three clearly distinguishable dimensions in measuring the performance of M&A: the task and transaction level, firm’s long-term performance and firm’s short-term window event study metrics.
In my study, I plan to find out the influence of a M&A deal on the change of company’s long-term performance. If a M&A deal can make the company performs better, this deal can be considered as a M&A with positive performance; If M&A is value-destroying to the company, then it is a M&A deal with negative performance.
In this section, I plan to discuss the studies related to the performance of M&A in different aspects of company’s operation.
Operating cash
Merger & acquisition (M&A) is an activity that made by the company to takeover or merge with other companies. Acquisition, also known as a takeover, is the buying of one company (the ‘target’) by another, while a merger is a combination of two companies into one larger company.
When company carry out a M&A deal, the manager will provide a rationale of why the company want to carry out a certain M&A deal and an expectation on the synergy and benefit of the M&A deal in the press release. In the press release, the manager mainly uses positive words or sentence to express the high positive expectation on the performance of M&A deal. However, the reality is that between 70% and 90% of M&As are not successful (Martin 2016), in that the completed M&A transaction is negative to the acquirer (the benefit the company receives cannot cover the price it paid). Therefore, manager tends to be …show more content…
Performance of M&A
The definition of performance of M&A is a question that has been studying by researcher for a long time, several studies tried to answer this question but their findings are not consistent. Zollo and Meier (2008) provide that there are three clearly distinguishable dimensions in measuring the performance of M&A: the task and transaction level, firm’s long-term performance and firm’s short-term window event study metrics.
In my study, I plan to find out the influence of a M&A deal on the change of company’s long-term performance. If a M&A deal can make the company performs better, this deal can be considered as a M&A with positive performance; If M&A is value-destroying to the company, then it is a M&A deal with negative performance.
In this section, I plan to discuss the studies related to the performance of M&A in different aspects of company’s operation.
Operating cash