Diversifying Acquisitions and Financial Relationships: Testing 19741976 Behaviour: Summary

Fifty-four diverisifying acquisitions in manufacturing and mining industries from 1974 to 1976 are investigated in terms of sales growth rate, rate of return on assets, and current ratio of the acquiring and acquired companies. The average characteristics of acquired companies, classified by the cha...

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Bibliographic Details
Published in:Strategic management journal 1983-04, Vol.4 (2), p.97
Main Author: Song, Jae H
Format: Article
Language:English
Subjects:
Acquisitions & mergers
Antitrust
Cash flow
Corporate profits
Current liabilities
Diversification
Expansion
Growth rate
Profitability
Rates of return
Strategic management
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Summary:Fifty-four diverisifying acquisitions in manufacturing and mining industries from 1974 to 1976 are investigated in terms of sales growth rate, rate of return on assets, and current ratio of the acquiring and acquired companies. The average characteristics of acquired companies, classified by the characteristics of their acquiring companies, are compared. Results indicate significant structural matches between the acquired and acquiring companies to exploit strengths and avoid weaknesses in growth, profitability, and liquidity. It appears that firms try to balance their business segments in terms of product life cycle stages within a limit of maintaining proper levels of profit.
ISSN:0143-2095
1097-0266