The Impact of M&A Deals on Financial Performance of Acquiring Company. The Case of Retail Industry

The objectives of the paper are to assess the effectiveness of mergers and acquisitions (M&A) in retail market on acquirers’ financial performance and obtain further insights on the financial performance of post-M&A activity acquiring firms. The analysis will be held through the analysis of changes in financial performance of post-M&A acquiring companies. The financial ratios (ROA, ROS, Net debt/EBITDA and others) and accounting values (Sales, Net income, EBITDA, EBIT and others) will be considered to determine the effect of this process on the position of the company on the market. The sample of 135 companies is used and their financial performance in a (-3;+3) years gap from the time of the deal. The analysis is based on industry-adjusted and raw data that is used in both change and intercept models. Findings show that in retail market the acquirers’ profitability and cash flows increase after the M&A during 3 years, while the leverage of such companies significantly decreases. Whereas, the efficiency metrics of acquirers decreases for the same period of time. The analysis of dummy variables shows that the post-M&A performance of acquirer does not depend on method of payment, while industry relativeness factor have a negatively influence this factor.