Impact of Merger and Acquisition on Financial Performance: Evidence from Construction and Real Estate Industry of India

This article aims to examine the impact of mergers and acquisitions (M&A) on the financial performance of the construction and real estate industry, using the broad spectrum of financial ratios. The period of study is from 2011 to 2020, and paired t-test methodology has been used. It is hypothes...

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Bibliographic Details
Published in:FIIB business review 2023-03, Vol.12 (1), p.74-84
Main Authors: Gupta, Isha, Raman, T. V., Tripathy, Naliniprava
Format: Article
Language:English
Subjects:
Assets
Financial performance
Mergers
Profitability
Real estate
Student's t-test
Synergy
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Summary:This article aims to examine the impact of mergers and acquisitions (M&A) on the financial performance of the construction and real estate industry, using the broad spectrum of financial ratios. The period of study is from 2011 to 2020, and paired t-test methodology has been used. It is hypothesized that there is a significant difference in the pre-M&A period and post-M&A period. The study findings conclude that profitability ratio and liquidity ratio have improved significantly, whereas leverage ratio exhibits no change in performance. In the efficiency ratio, the fixed-assets turnover ratio substantially improves, but the total asset turnover ratio and current asset turnover ratio show a slight improvement. The study concludes that the Indian construction and real estate company’s financial performance has improved overall for the acquiring firms during the post-M&A period. The study implies that the construction sector supports the synergy hypothesis, stating that M&A will improve synergy during the post-M&A period because of the consolidation of two firms’ resources.
ISSN:2319-7145
2455-2658
DOI:10.1177/23197145211053400