EXPLORING VALUE CREATION OR DESTRUCTION IN MERGER AND ACQUISITION

Abstract

Mergers and Acquisitions (M&A) have become increasingly prominent in today’s dynamic global business environment as organizations seek to expand their market reach, achieve operational efficiencies, acquire new capabilities, and drive long-term shareholder value. These strategic moves are often considered essential for corporate growth, particularly in industries facing rapid technological advancement, increased competition, and changing consumer preferences. Yet, while the theoretical advantages of M&A deals are well known, empirical evidence of their success is mixed. Numerous high-profile mergers that held out the promise of transformational value have not delivered, leading to financial underperformance, cultural clashes, and even ultimate divestiture. This uncertainty leads to a basic question: Do Mergers and Acquisitions create or destroy value for shareholders? This Major Research Project seeks to examine this topical concern by considering the effect of M&A transactions on shareholder value across a wide range of industries. The research delves into not just the short-term market reaction to announcements of M&As but also long-term acquiring company financial performance following a merger. Unlike many prior studies that primarily focus on theoretical models or isolated financial indicators, this study adopts a comprehensive, data-driven approach that combines quantitative analysis, case study methodology to offer a multidimensional perspective on M&A outcomes. Motivation and Research Gap Despite extensive academic and industry research, there remains a notable gap in empirical literature that integrates financial data analysis, stock price behavior, and market sentiment to assess M&A success. There has been a propensity for existing research to focus the scope of studying M&A performance on narrow facets, such as synergy realization or financial restructuring in isolation or, alternatively, focused on isolated post-merger metrics. In this project, a holistic framework is used which combines financial analytics with insights based on investor sentiment and media coverage to evaluate more general implications arising from M&A transactions. That is, find out not just whether M&A creates value, but why certain deals succeed whereas others fail.