Academy of Entrepreneurship Journal (Print ISSN: 1087-9595; Online ISSN: 1528-2686)


Impact of Mergers and Acquisitions: A Critical Review of Literature

Author(s): Neha Rohra and Anita

In this age of cut – throat competition, every company wants to grow and be ahead of its competitors. There are two ways to achieve growth- first the Greenfield expansions resulting in Organic growth in one’s own unit, and second the Brownfield expansions or M&As resulting in Inorganic growth. In a hurry to expand and beat the competitors profitably, the companies are restructuring themselves through M&As.

Mergers and Acquisitions (M&As) are the inorganic growth strategies which have become important in today’s corporate world due to increase in competition and complexity. The companies are expected to perform post M&A so that they create wealth for the shareholders. This paper is an attempt to review the major studies undertaken in the field of mergers and acquisitions across the globe. Various researchers have studied different aspects of M&As- ranging from the domestic and cross- border M&As, their causes, trends etc. to the impact of Mergers and Acquisitions on the corporate performance. The studies looking at the effects of M&As can be broadly classified into three- market measures based, accounting measures based and mixed measures based studies. From the literature review, however, it is found that there is no conclusive evidence to show that M&As are responsible for value creation for the companies and their shareholders. Moreover in recent periods M&A deals have increased tremendously. Hence there is a need to look into the post M&A performance of companies more closely to find out whether the M&A activity helps the corporations in achieving the objectives of increased efficiency and profitability in the form of value creation.

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