Sources of Synergy Realization in Mergers and Acquisitions: Empirical Evidence from Non-Serial Acquirers in Europe

Nancy Huyghebaert, Mathieu Luypaert

Abstract


We empirically investigate the sources, magnitude, and timing of synergy realization for 293 M&As by non-serial listed acquirers in Europe during 1997–2005. In contrast to much of the existing literature, we find that the shareholders of non-serial acquirers gain significantly upon deal announcement. Next, we unravel the various sources of M&A value creation, in particular operating synergies resulting either from revenue enhancement or from savings on operating costs and investments, and financial synergies. Compared to its non-combining industry peers, the median combined sample firm reports a 4.92% larger sales growth rate by the third post-deal year. Operating costs relative to sales are reduced by an extra 1.53% over this same window. In leverage-increasing acquisitions, the median combined firm realizes a persistent 6.09% rise in its long-term debt ratio. Finally, our multivariate regression results point out that non-serial acquirers with a larger market-to-book ratio achieve more extensive operating synergies.

Full Text: PDF DOI: 10.5430/ijfr.v4n2p49

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.

International Journal of Financial Research
ISSN 1923-4023(Print) ISSN 1923-4031(Online)

 

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