The Effectiveness of M&A for the Acquired Companies in the Automotive Industry

This paper investigates the efficiency of M&A deals from the point of view of the target firm. The data on the completed M&A deals for the period from 1998 up to 2018 is used as a sample. Data base consists of 105 deals between companies operating in automotive industry of such regions as Eastern and Western Europe, USA, developed Asian markets including China and Japan. The model assumes construction of 2 models: based on pannel data for 2 year for each company before the M&A deal and based on 5-year panel of financial results for each company after the deal. The aim of this research is to reveal the long-run effect on merged automotive companies and to determine the numeric value of this influence. Moreover, the paper revises the motives of M&A deals and the methods of its' estimation. Constructed regression FE model shows positive affect of financial indicators on the value of target companies after M&A deals. The list of variables includes improvement of such indicators as costs, level of technologies, net income, volume of debt and so on. The results of this research will provide the empirical evidence on the influence of merger and acquisition deals on the target company.