Do mergers and acquisitions create shareholder value, and what factors significantly influence their impact on the stock price of acquiring companies ?
SONAR|HES-SO
- Boutayeb, Ibtissam
- Le Berre, Alain (Degree supervisor)
- Genève : Haute école de gestion de Genève
72 p.
Bachelor of Science HES-SO in International Business Management: Haute école de gestion de Genève, 2024
English
This bachelor’s thesis investigates the impact of mergers and acquisitions (M&A) on shareholder value, with a specific focus on the effects these transactions have on the stock prices of acquiring companies within the financial sector. This inquiry addresses a critical question in financial management: "Do mergers and acquisitions create shareholder value, and what factors significantly influence their impact on the stock price of acquiring companies?"
The study employs a mixed-methods approach, combining extensive quantitative analysis of 292 M&A transactions (sourced from FactSet and analyzed with IBM SPSS Statistics) with qualitative insights gleaned from a survey of 39 M&A professionals and specialists across key global financial hubs. This robust methodology ensured a comprehensive exploration of the intricate dynamics of M&A.
Principal findings reveal that successful M&As generally lead to enhanced shareholder value, particularly when the acquiring firms focus on strategic alignment and integration. Key factors influencing stock prices include the method of payment—cash, stock, or a combination thereof—and the market sentiment at the time of the transaction. Strategic buyers were found to enhance value more effectively than financial buyers, emphasizing the importance of strategic fit over financial engineering. Moreover, the study underscores the significant role of post-merger integration in achieving desired financial outcomes, with effective integration directly correlating with stable or improved stock prices post-M&A. Based on these findings, the thesis offers several recommendations for companies contemplating M&A: Prioritize strategic fit and synergy potential over mere financial gains to maximize the long-term success of M&A transactions – Enhance due diligence processes to better predict integration challenges and market reactions – Develop comprehensive communication strategies to manage investor expectations and market perceptions throughout the M&A process.
In conclusion, while M&A can indeed create substantial shareholder value, the extent of this value is heavily influenced by strategic planning, execution, and market conditions. This study not only contributes to academic knowledge by confirming theories of strategic management in M&A but also provides practical frameworks for corporate executives aiming to leverage mergers and acquisitions for competitive advantage. This thesis invites further research into the evolving impact of global economic conditions on M&A success, particularly in the volatile financial sector.
The study employs a mixed-methods approach, combining extensive quantitative analysis of 292 M&A transactions (sourced from FactSet and analyzed with IBM SPSS Statistics) with qualitative insights gleaned from a survey of 39 M&A professionals and specialists across key global financial hubs. This robust methodology ensured a comprehensive exploration of the intricate dynamics of M&A.
Principal findings reveal that successful M&As generally lead to enhanced shareholder value, particularly when the acquiring firms focus on strategic alignment and integration. Key factors influencing stock prices include the method of payment—cash, stock, or a combination thereof—and the market sentiment at the time of the transaction. Strategic buyers were found to enhance value more effectively than financial buyers, emphasizing the importance of strategic fit over financial engineering. Moreover, the study underscores the significant role of post-merger integration in achieving desired financial outcomes, with effective integration directly correlating with stable or improved stock prices post-M&A. Based on these findings, the thesis offers several recommendations for companies contemplating M&A: Prioritize strategic fit and synergy potential over mere financial gains to maximize the long-term success of M&A transactions – Enhance due diligence processes to better predict integration challenges and market reactions – Develop comprehensive communication strategies to manage investor expectations and market perceptions throughout the M&A process.
In conclusion, while M&A can indeed create substantial shareholder value, the extent of this value is heavily influenced by strategic planning, execution, and market conditions. This study not only contributes to academic knowledge by confirming theories of strategic management in M&A but also provides practical frameworks for corporate executives aiming to leverage mergers and acquisitions for competitive advantage. This thesis invites further research into the evolving impact of global economic conditions on M&A success, particularly in the volatile financial sector.
- Language
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- English
- Classification
- Economics
- Notes
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- Haute école de gestion Genève
- International Business Management
- hesso:hegge
- Persistent URL
- https://folia.unifr.ch/global/documents/330852
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