M&A Strategies – Empirical Analysis of Indian Scenario

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The Empirical Economic Letters
(Special Issue)

Inorganic growth by means of Mergers & Acquisitions (M&As) activities has gained significant traction in the recent past, with many corporates favoring this path worldwide. In India, the regulatory environment during 1970’s to 1990’s had not been conducive to M&As activities. India started catching up with the global trend of M&As post-financial reforms in 1990s. Since then, various structural changes in the economy like change in interest rates, market size, liquidity, among others, and regulatory changes like replacement of the MRTP Act by Competition Act, 2002 have favored the number of M&A deals. Indian corporates are assigning a lot of importance on the inorganic path of growth and treating M&A as a focal strategy point for value creation and improving shareholder value. There are many financial and non-financial aspects that influence strategy as well as the success of a typical M&A deal. This paper aims at studying the success and failure of M&A deals in terms of the impact of various financial ad non-financial factors. The study uses simple ordinary least squares method of estimation. Results are in line with theoretical expectations in terms of coefficients with reasonable goodness of fit.