“Warren Buffett swallows Heinz: Sauce for the sage” – a typical takeover announcement was published lately on 14th February 2013. Warren Buffett, a well known inves tor, acquired along with the financial investor 3G Capital the H. J. Heinz Company for $ 28 billion. This is likely to become the largest transaction in the food industry. The company's stock price rose more than 20.0 percent after the publication which is a very characteristic reaction to deal announcements. Hence, the important question is, if transactions, such as the takeover of the H. J. Heinz Company, affect the corporate performance consistently.
In general, the core idea about mergers and acquisitions (M&A) is to generate additional future growth if for example organic growth is limited. If two companies merge or a target is bought by another company (the acquirer), shareholders believe in synergy effects. These are revenue enhancements, cost reductions, tax gains and reduced capital requirements leading to business growth and thus to a higher value of the new company. However, it is questionable if this theory can also be experienced in the real world.
Ever since the effects of M&A have been analysed, the market of the United States (US) was used as data source. This is plausible due to the fact that the very first information was well recorded for US companies. It is remarkable that literature contributes very little research on Europe, although the number of announced European transactions is comparable to those of the US. For example, in 2007 the European deals volume overtook the one from the United States of America (USA) for the first time. Moreover, research on single European countries almost never exists or only rarely. One exception is the United Kingdom (UK) with an early takeover history beginning in the 1960s. However, European countries should be analysed separately because of its high diversity regarding the accounting framework, the corporate governance or the legal and regulation structure. For instance, Germany is characterised by conservative accounting principles and a high regulation by the banking sector. These issues may also influence the M&A decision making process.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- 1 Problem and research question
- 1.1 Research design
- 1.2 Structure of the paper
- 2 Literature review
- 2.1 Market-based studies
- 2.2 Accounting-based studies
- 3 Transactions
- 3.1 Fundamentals of transactions
- 3.1.1 The M&A term and basic forms of transactions
- 3.1.2 The M&A process
- 3.1.3 Motives for M&A activities
- 3.2 Key drivers of M&A
- 3.2.1 Determinants by Datta, Pinches and Narayanan (1992)
- 3.2.2 Determinants by Hitt et al. (2012)
- 3.2.3 Further relevant drivers of M&A
- 3.2.4 The underlying determinants for the empirical study
- 3.3 Development of transaction markets
- 3.3.1 Reasons for M&A waves
- 3.3.2 Development of the global market of corporate control
- 3.3.3 The German transaction market
- 4 Methodologies
- 4.1 Market-based measurement
- 4.2 Accounting-based measurement
- 4.3 Strengths and weaknesses
- 5 Empirical investigation
- 5.1 Data sample and screening procedure
- 5.2 Hypotheses
- 6 Statistical analyses and results
- 6.1 Market-based approach: Short-term shareholder's return
- 6.1.1 Robustness
- 6.1.2 Bidding versus target companies
- 6.1.3 Univariate regression analysis
- 6.1.4 Multivariate regression analysis
- 6.2 Accounting-based approach: Long-term operating performance
- 6.2.1 Robustness
- 6.2.2 Bidding versus target companies
- 6.2.3 Univariate regression analysis
- 6.2.4 Multivariate regression analysis
- 6.3 Overall statement
- 7 Limitations and future outlook
- 8 Summary and conclusion
- The impact of M&A on shareholder returns
- The relationship between M&A activity and firm profitability
- The role of various determinants in driving M&A activity
- The development of the global and German transaction markets
- The strengths and weaknesses of market-based and accounting-based performance measurement methods
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This master's thesis investigates the impact of mergers and acquisitions (M&A) activities on corporate performance in the German market. The research aims to assess the short-term and long-term effects of M&A on both accounting and market-based performance metrics. Key themes explored in the study include:Zusammenfassung der Kapitel (Chapter Summaries)
The introduction outlines the research question and aims of the study, focusing on the impact of M&A on corporate performance in the German market. It also details the structure of the paper, providing a roadmap for the reader. Chapter 2 presents a comprehensive literature review, examining existing studies that explore the relationship between M&A and firm performance. This chapter delves into both market-based and accounting-based studies, providing a foundation for the empirical investigation. Chapter 3 dives into the fundamentals of M&A transactions, exploring the M&A process, motivations for M&A activity, and key drivers of M&A transactions. The chapter also analyzes the development of the global and German transaction markets, highlighting significant trends and patterns. Chapter 4 outlines the methodologies employed in the study, detailing the market-based and accounting-based performance measurement approaches. It discusses the strengths and weaknesses of each approach, providing a framework for the empirical analysis. Chapter 5 presents the data sample and screening procedure used for the empirical investigation. It also outlines the specific hypotheses tested in the study. Chapter 6 presents the statistical analyses and results, examining the short-term and long-term effects of M&A on both market-based and accounting-based performance measures. This chapter analyzes the impact of M&A on shareholder returns, firm profitability, and the role of various determinants in driving M&A activity. Chapter 7 discusses the limitations of the study and potential areas for future research.Schlüsselwörter (Keywords)
This study focuses on the impact of mergers and acquisitions (M&A) on corporate performance. The research primarily examines the German market, utilizing both market-based and accounting-based performance measures. Key concepts include: shareholder returns, firm profitability, M&A drivers, global and German transaction markets, and the strengths and weaknesses of different performance measurement methods.- Arbeit zitieren
- Malwina Woznik (Autor:in), 2013, The Impact of Merger and Acquisition Activities on Corporate Performance Measured on an Accounting and Market Base, München, GRIN Verlag, https://www.grin.com/document/231303
