Application of performance measures to mergers and acquisitions

• Main Author: Evstafyeva, Anna
• Other Authors: Melnikov, Alexander (Department of Mathematical and Statistical Sciences)
• Format: Others
• Language: en
• Published: 2009
• Subjects: merger; acquisition; performance; measure
• Online Access: http://hdl.handle.net/10048/640

The main part of this thesis was devoted to applying performance measures in the analysis of mergers and acquisitions. Performance measures take into account the profitability of a company and the risk associated to that company.To analyze potential post-merger synergies one can combine the pre-merger financial results of two companies and calculate the value of an applicable performance measure. If the value exceeds that of the bidder by itself the merger is said to generate positive synergies. The thesis demonstrates how the calculations can be performed as well as advantages and disadvantages of various performance measures. Most performance measures involve company's returns. It was shown that only quarterly return is a reliable source of information about company's performance. To deal with quarterly data annualization method for all applicable ratios was developed. Several examples were created to demonstrate advantages and disadvantages of annualized applicable performance measures. Three real-world examples of recent acquisitions in Canada and USA were given and analyzed . === Mathematical Finance