Reviewing Mergers: Assessing Performance and Strategic Issues

Abstract

Based on secondary data and interviews of executives, this paper reviews mergers during last decade in India. Based on this review of mergers of companies in India, the author finds that there is a positive impact of mergers on earning per share and therefore there is a tendency on the part of companies to go for merger with the ultimate objectives of gaining synergies and better performance. Secondary data revealed the due to merger, there was decline in return on assets, but the Earning per share improved, which resulted in better valuation and better market appreciation. Primary data revealed that executives found that merger improved overall performance. However, the author also finds that there is lack of proper information among employees. The executives reported experiencing heightened level of stress and anxiety due to the event of merger. There is a need of proper orientation and information sharing and training to the employees. Mergers generate positive outcomes, but companies must also focus on building better culture and create proper motivation and training among employees.

Keywords: merger, amalgamation, performance, strategic management, strategy

JEL Classification: G34, N25