Mergers and Acquisitions in the Russian Economy: Peculiarities and Patterns

Abstract

Mergers and acquisitions play a dual role in the development of national economies. On the one hand, the quantitative and value assessments of transactions should directly affect the capitalization of the stock market, but the Russian economy is exposed to political risks than economic ones to a greater degree. On the other hand, concerning the impact of determining factors (GDP, interest rate, changes in law, taxation system) we can discover specific conditions of the M&A market in Russia. Over the past decade, the Russian M&A market has been multidirectional. Due to the imposition of sanctions, the devaluation of the ruble, and increased key interest rate in 2015, the M&A market demonstrated the worst indicators. In 2018, the Russian M&A market showed moderate growth, as far as the Russian economy managed to adapt to external challenges (unstable geopolitical situation, insignificant economic growth, and lower interest rates). These factors will have a lagged effect on the M&A industry as a whole. Most Russian companies do not place shares on the stock exchange, therefore the correlation between capitalization of the stock market and the total value of transactions is only 0.244. The structure of the M&A market indicates the prevalence of acquisitions in the Russian market. The Russian stock market is underdeveloped than in the West, and the Russian securities cannot be regarded in the long term as a liquid payment instrument.