MERGERS AND ACQUISITIONS: - IS IT AN EFFICACIOUS STRATEGY IN VUCA WORLD?

ABSTRACT
The current pandemic has made the business environment more complex and constituted unusual challenges in front of organizations to rebalance and regain the momentum of economic growth in the crisis. The firms have to cast around for varied investment opportunities that proffer sustainable growth and value creation in the long run for the shareholders. This engine of growth can be set in motion by looking for possibilities available within (also known as internal growth) or outside (also known as external growth) of the organization. Mergers and Acquisitions (M&A) are one of the instruments of the external growth that have played a pivotal role across the globe for the business entities of diverse sectors. M&A is a strategic tool that offers both – short term as well as long term benefits to the acquiring firm. From the literature review, is has been observed that so far the researchers have undertaken the studies to see the short run impact of M&A on the financial performance of the companies after the merger.
The present research work is addition to the current body of knowledge, which focus upon the long run aspect of M&A and assess whether M&A has been able to construct value for shareholders by creating a sustenance in financial performance post-merger. To do so, the M&A deals of F.Y. 2004-05, 2005-06 and 2006-07 were studied and a sample of 46 companies comprising of 50 M&A deals covering the 14 different sectors that are in existence till date and the targets have been merged with acquirer have been selected for the study purpose. The DuPont Return on Equity (ROE) model was put in use for comparing a before and after merger financial performance of these companies with the time frame of twelve years – six years pre and six years post-merger. Further, to arrive at statistical interferences non-parametric test - Wilcoxon signed rank test was applied. The outcome revealed the mixed impact of M&A on all four ratios and no sector specific results were obtained.

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