The Effect of Mergers and Acquisitions on Financial Performance

[Name of the Supervisor]

Abstract

The proposed research paper has determined the effect of merger and acquisition on financial performance of South African companies that are listed on the Johannesburg Stock Exchange. The proposed research paper has explored prior academic literature and other secondary sources to investigate the proposed research problem. Moreover, the proposed study is based on a descriptive research design to draw concrete research findings on the proposed relationship between merger and acquisition decision and financial performance of involved companies. In order to draw a clear understanding of the subject matter and to test proposed hypothesis, the research paper has set the focus to determine influence of successful mergers and acquisitions on the post share price of merged company. The proposed research had deployed both primary and secondary sources to draw reliable and valid proposed research results. Moreover, the proposed research has selected the instrument of ACAR to analyze the financial performance of selected South African companies and provide clear answer to the proposed research problem.

Key Words: Merger and acquisition, financial performance, South African companies, Johannesburg Stock Exchange, prior academic literature, descriptive research design, proposed hypothesis, post share price, primary and secondary sources, ACAR, research problem

Abstractii

Introduction1

Aims and Objectives of the Proposed Research1

Rational of the Proposed Research2

Review of Academic Literature2

Theoretical Framework3

Research Problem4

Research Hypothesis4

Key Definitions5

Merger5

Acquisition5

Financial Performance5

Pre Merger Price5

Post Merger Price6

Assumptions and Limitations6

Conclusion6

Recommendation(s)6

Proposed Research Design7

Data Sources and Methods to Collect Data7

Data Synthesis and Interpretation7

Feasibility of Research Design8

References9

Bibliography12

The Effect of Mergers and Acquisitions on Financial Performance

Introduction

The proposed research paper aims to investigate the effect of merger and acquisitions on financial performance of a firm. The proposed study narrows down research focus to selected South African companies. In the light of prior literature, the proposed study aims to test the proposed hypothesis and draw authentic results that are comparable with the evidence collected through literature review. Moreover, the proposed study provides definitions of key terms followed with underlying assumptions and limitations of the paper. In order to provide expected research outcomes and possible recommendations, the paper undertakes descriptive research design by earning an access to reliable primary and secondary sources of data collection.

Aims and Objectives of the Proposed Research

The study will undertake following aims and objectives:

To ascertain the effect of M&A on the financial performance of companies involved in M&A

To evaluate measurement and analysis methods to investigate the post merger impact on the financial performance of merged company based on three parameters:

Change in the intrinsic value of merged company

Change in the share price of merged company

Change in the operating cash flows of merged company

To draw a comparison between proposed research findings and prior literature to create authentic results

Rational of the Proposed Research

In the past few years, significant academic literature has been published on merger and acquisition activities; however, the proposed study will explore M&A in a South African context. The proposed study will evaluate influence of M&A decision on the financial performance of selected South African companies by identifying various aspects that contribute to the success or ...