Determinant Factors of M&As in Emerging Economies: The Impact of Financial Performance in Romanian Minority Acquisitions

Abstract

The paper aims at describing two dimensions of acquirers’ behaviour when purchasing minority shares in Romanian listed target companies, based on a sample of 710 Romanian minority acquisitions. The first dimension regards the acquirer’s decision to invest a certain amount, being influenced by the profitability of the target company The relationship was found to be positive and significant. To test the model further, a sample of 308 transactions was used, after excluding the transactions involving primary sector and blue-chip target companies. The second dimension focuses on the amount of purchased stake, which leads to either financial gains or the takeover intention, under the influence of the target company’s operational profit. The results show a positive and significant relationship for the small stakes and a non-significant one for the high stakes.

The moderating effects of the industry competition level and industry diversification on the relationship between the transaction price of mergers and acquisitions and corporate value

“…This is because intangible assets, such as goodwill, are added to the fair value by the acquirer, among other factors (Hübscher & Martynkiewitz, 2021). Additionally, extra amounts may be paid in anticipation of synergy effects with the target firm (Maha et al, 2023). Furthermore, the CEO's characteristics, including hubris or excessive self-confidence, explain a significant portion of M&A premiums quantitatively (Brahma et al, 2023).…”

“…This is because the acquirer company adds intangible assets (goodwill), among other factors, to the fair value, which considers similar assets in the market or the market trading price of the company when measuring the target firm's transaction price (Hübscher & Martynkiewitz, 2021). Furthermore, depending on the acquirer's strategic decisions, additional amounts can be paid with the expectation of synergistic effects with the target firm (Maha, Aevoae, Viorică, & Dicu, 2023). These additional amounts may be higher depending on the competitive environment surrounding the M&A (Just, Honold, & Meckl, 2023).…”