M&A Deals in Russia During the Economic Uncertainty Period - Sanctions

This research examines the impact of economic and political uncertainty on mergers and acquisitions (M&A) in Russia, a topic that has not been explored in the Russian context, despite extensive research in other countries. The study aims to fill this gap by examining how external pressures, in particular economic policy uncertainty (EPU), affect M&A transactions. The analysis covers more than 350 transactions from a dataset of more than 4000 M&A deals in Russia from 2004 to 2024, refined according to specific criteria. Three hypotheses were tested: (1) target firms are less likely to be acquired during periods of high political uncertainty; (2) M&A transactions are less likely to be completed when the target firm has government involvement; and (3) M&A transactions are more likely to be completed when the target firm has high leverage. The study found that higher leverage significantly increases the likelihood of M&A activity, while government involvement is not a significant factor. The EPU index was significant in relative stable period (from 2004 to 2013), but not in periods of high uncertainty, suggesting that it may not adequately capture the unique nuances of the Russian market in turbulent times, indicating the need for a more tailored EPU index for Russia.