Merger is to bring two or more separated companies together to form a
larger one; acquisition means the purchase of one company by another and no new
company is formed in the process. And they’re usually used together and known as
M&A.
M&A is a major form of capital operation and management for most
of enterprises. And it can include a number of different transactions, such as
mergers, acquisitions, consolidations, tender offers, purchase of assets and
management acquisitions.
The ultimate purpose for most enterprises which use M&A is to
improve the growth of the enterprise and increase their enterprise value. But
can all the M&A succeed? And do you know how to evaluate the efficiency of
mergers and acquisitions (M&A)? In fact, it’s one of the most difficult
problems for most of the economists and experts because all kinds of approaches
are used to identify the effects of M&A.
In 2013, some Brazilian researchers also made a study for the problem due
to lack of related studies in their own country. They evaluated the efficiency
of M&A in the publicly-traded companies in Brazil. And they used some models with multiple objectives from Goal
Programming and Data Envelopment Analysis (GPDEA), employing accounting
indicators as input and output variables, and thus evaluated the emergence of
synergy gains. The result showed that GPDEA was a much more suitable model for
analyzing the efficiency of M&A and the M&A in the publicly-traded
companies in Brazil during 2000-2007 was very rarely efficient and had
diminished synergistic gains.
All in all, mergers and acquisitions (M&A) is an
important form and method to achieve the development and growth of enterprises,
so its efficiency should be paid more attention to and also be evaluated
frequently in all over the world, then the failure rate of M&A can be
declined.
Article by Paulo Rotela Junior, et al,
from Brazil.
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