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Sources of synergy realization in mergers and acquisitions: Empirical evidence from non-serial acquirers in Europe
Journal Contribution - Journal Article
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.
Journal: International Journal of Financial Research
ISSN: 1923-4023
Issue: 2
Volume: 4
Pages: 49 - 67
Publication year:2013
Accessibility:Open