Mergers and Acquisitions: Quick or Distant Payoff Strategy: Pointers from Indian Consumer Goods and Information Technology Sector | Original Article

ABSTRACT:

Mergers and Acquisitions (M&A) has a glorious past wherein this method was put forth in both - pre and post liberalization period with the different targets to be achieved. In former it was used as an effective tool by the government for rejuvenates the ailing units. Latterly in order to combat with the fierce competition by local as well as international players, business enterprises employed this technique. With the passage of time, M&A has gained popularity amongst local and global players from the diverse sectors for attaining growth. The present paper studies the impact of M&A in the long run by computing and comparing Return on Assets (ROA) as per Du Pont Framework for twelve years — six years pre and six years post-merger on the sample of seven companies that caters to Consumer Goods and Information Technology sector and have done M&A in F.Y. 2004-20052004-2005, 2005-2006 and 2006 -2007 and are yet operating. After applying the Du Pont Framework, the results found depicted the mixed effect of M&A on the all three ratios and was company centric and not particular to any sector.