The Target Company Selection in Cross-Border Acquisitions (Case of an Indian Pharmaceutical Company's Expansion into the Russian Market)

Research has shown that approximately 60% of all merger and acquisition (M&A) transactions result in an unfavorable outcome, with the primary goals not being achieved or integration after the merger failing. There are various reasons for unsuccessful deals, especially cross-border transactions, including a lack of careful planning and well-researched case studies. The purpose of this paper lies in the identification of target company selection criteria and the subsequent evaluation of the chosen firm as a part of an Indian company’s expansion into the Russian market. We plan to achieve the goal of our research by performing a simulation case study of a hypothetical acquisition between an Indian company (Divi’s Laboratories) and a Russian company (Materia Medica Holding). To do this, we will develop a set of objective industry-specific criteria for potential acquisition targets, based on theoretical framework and literature review. Following that, we conduct a qualitative analysis of each potential target company and quantitatively evaluate the top candidate using the discounted cashflow model. Lastly, we calculate the synergistic effects of the transaction and give recommendations for a successful post-acquisition integration phase.