Assessment of Mergers and Acquisitions Effectiveness Factors in Russia

Mergers and acquisitions are common activities among companies that aim at rapid firm’s growth. However, there is a possibility of a negative outcome of M&A deal. This paper aims to define how M&A deals affect the value of companies. In this study we also analyze which factors have a positive and negative influence on M&A effectiveness. We examine 70 Russian and cross-border merger and acquisition deals which were conducted by Russian listed companies in order to investigate how share prices deviation links with companies’ financial indicators before a merger or an acquisition using an event-study analysis. The major result of the paper is that pre-merger financial indicators do not influence the buyer’s abnormal stock return. Our interpretation is that Russian M&A deals do not aim at operational or financial synergy achieving. Their motives are capital re-allocation, taxation optimization, diversification, etc. The findings of the study can be a base for future research of evaluating a risk of merger or acquisition failure.