Growth and Profitability of Acquiring Firms in India: An Analysis

Abstract

With the advent of globalization and liberalization, the concept of M&As has become an integral part of the Indian economy. This phenomenon has had far reaching repercussions on Indian industrial milieu, its development and growth. The changing market conditions have brought very significant and spectacular developments in the economic scenario in India. One of the most fascinating of these developments is the emergence of merger and acquisition activity in the industrial sector. Corporate sector in India has been witnessing from time to time the incidents of M&A. In accordance with the respective business strategies, a large number of firms undergo M&A every year. It is in this context that the present study has been undertaken to analyze the impact of M&As on the efficiency of seventy seven acquiring firms undertaken for the study in terms of growth and size. For the acquiring firms in the year 1999, the time period 1996-99 has been taken as pre-merger period and 2000-04 as post-merger period. The pre-merger and post-merger period for firms in year 2000 has been taken as 1996-2000 and 2001-04, respectively.

Keywords: pre-merger, post-merger, growth, size

JEL Classification: G34,D21,L25