Financial Synergies of Mergers and Acquisitions: Between Intentions and Achievements

Abstract

Mergers and acquisitions (M&A) market is a barometer of the attractiveness of the national economy for the foreign capital but also for the local capital to develop its businesses. In recent years, worldwide, foreign investments have resulted mainly in M&A transactions than in green field investment. The objective of this article is to analyze the financial performance of companies in Romania which went through a M&A transaction, before and after this transaction. The purpose of this research is to determine if the financial performance of these companies has improved after a M&A transaction. The financial performance of M&A transactions in Romania will be analyzed, during the 2010–2013 period, taking into consideration a sample of ten transactions from several industries. The objective of the study is to analyze the impact of M&A transaction on the financial performance of the companies involved. We consider that a M&A transaction is efficient in financial terms if it generates growth in profit and if it generates an increase in value for shareholders, compared to previous values before the transaction. Financial performance measurement method used in this study is accounting-based measure, using financial indicators analysis. Through this method, it will be established: the impact of M&A transaction on the profitability of companies and the impact of M&A transaction on the value created for shareholders.

Appendix 22.1

The results of the indicators of the analyzed companies

Company	2010	2011	2012	2013	2014	2015
1. Real-Auchan
Turnover	1,498,002,996	1,578,059,613	1,973,757,257	2,300,730,369	3,770,686,684	4,444,160,904
Gross profit	−19,302,726	−9,679,764	9,591,917	−88,003,347	−52,346,933	50,654,365
Total assets	498,000,000	1,578,000,000	1,973,760,000	2,300,730,000	3,770,000,000	2,950,464,738
ROA %	−4	−1	0	−4	−1	2
Cash ratio %	13	5	5	9	2	1
Roe %		−5	2	−12	−7	5
Debt ratio %	84	42	37	42	35	61
Profitability of the share capital %		−3	1	−10	−5	4
2. Pambac
Turnover	181,933,815	156,688,866	119,977,880	152,149,704	171,316,469	191,099,466
Gross profit	2,370,644	4,015,409	659,092	361,535	7,459,141	5,981,725
Total assets	80,350,000	81,630,000	81,960,000	123,580,000	103,200,000	120,824,774
ROA %	3	5	1	0	7	5
Cash ratio %	4	12	5	6	6	6
Roe %	5	8	1	0	15	12
Debt ratio %	47	46	50	71	59	60
Profitability of the share capital %	9	15	2	0	28	25
3. Azomures
Turnover	1,202,016,666	1,625,577,204	1,829,333,521	1,599,340,920	1,681,092,188	1,728,273,019
Gross profit	955,260,000	1,305,130,000	1,503,250,000	1,430,800,000	1,763,800,000	1,971,282,603
Total assets	175,102,672	424,060,846	289,676,859	124,246,007	143,940,842	148,365,307
ROA %	18	32	19	9	8	8
Cash ratio %	30	18	9	11	7	1
Roe %	21	33	18	8	10	10
Debt ratio %	16	16	11	15	31	38
Profitability of the share capital %	293	694	464	199	234	234
4. Rombat
Turnover	280,515,928	319,058,489	299,046,836	305,193,974	285,774,995	309,568,697
Gross profit	254,350,000	273,650,000	322,160,000	335,710,000	327,500,000	351,521,984
Total assets	16,928,957	17,619,904	21,853,420	21,926,044	11,054,740	8,122,586
ROA %	7	6	7	7	3	2
Cash ratio %	16	2	1	7	1	1
Roe %	10	9	10	9	5	3
Debt ratio %	41	37	41	28	26	26
Profitability of the share capital %	45	46	56	57	28	21
5. Zaharul Ludus
Turnover	77,417,982	72,534,749	171,634,181	180,831,715	184,987,939	140,058,177
Gross profit	105,530,000	117,360,000	211,760,000	255,580,000	183,630,000	169,693,028
Total assets	3,368,463	13,126,603	36,017,098	11,608,142	−24,896,568	−15,623,748
ROA %	3	11	17	5	−14	−9
Cash ratio %	16	21	10	8	3	3
Roe %	9	11	23	7	−21	−15
Debt ratio %	70	13	37	43	35	30
Profitability of the share capital %	9	36	98	30	−80	−49
6. eJobs
Turnover	8,344,911	10,172,223	10,194,929	10,293,780	12,983,551	16,758,477
Gross profit	4,863,239	6,060,000	5,510,000	6,200,000	7,980,000	10,453,409
Total assets	5,939,800	6,367,838	5,793,768	6,371,252	8,191,939	10,081,609
ROA %	122	105	105	103	103	96
Cash ratio %	89	88	79	85	83	86
Roe %	100	98	98	98	98	99
Debt ratio %	11	11	10	12	12	18
Profitability of the share capital %	4866	5969	5399	5972	7657	9436
7. Takeover of Dialmed clinic by Diaverum
Turnover			19,474,039	68,975,842	90,235,250	104,017,564
Gross profit	756,061	87,504,615	128,599,396	160,755,340	163,751,215	435,323,342
Total assets	−1,858,360	−4,425,209	−11,421,017	−15,218,822	−11,082,011	−8,520,694
ROA %	−246	−5	−9	−9	−7	−2
Cash ratio %	44	5	8	8	10	70
Roe %	105	71	−144	−222	−648	−6
Debt ratio %	334	107	94	96	99	68
Profitability of the share capital %	−930	−2213	−124	−165	−93	−5
8. Takeover of Spumotim
Turnover	857,879,057	1,119,868,177	1,295,437,947	1,627,526,538	1,460,796,608	912,612,963
Gross profit	321,159,768	539,979,539	1,005,716,044	883,291,548	928,837,705	1,449,492,233
Total assets	50,410,739	−10,661,767	−91,185,056	−53,301,928	176,381,410	−20,894,850
ROA %	16	−2	−9	−6	19	−1
Cash ratio %	20	21	8	2	0	50
Roe %		46	12	2	9	4
Debt ratio %	70	84	101	108	93	97
Profitability of the share capital %	#div/0!	2813	550	110	465	103
9. Takeover of Clinica Eva by MedLife
Turnover	144,779,891	166,457,784	201,636,884	228,588,566	251,092,044	291,014,966
Gross profit	140,833,628	200,630,612	207,557,054	241,037,040	259,119,712	285,298,826
Total assets	86,939,108	−3,227,339	−9,695,387	3,752,415	11,200,926	13,627,270
ROA %	62	−2	−5	2	4	5
Cash ratio %	2	1	1	2	1	0
Roe %	175	−6	−22	3	10	11
Debt ratio %	54	71	79	67	66	65
Profitability of the share capital %	231	−74	−206	46	187	220
10. Takeover of Bramac by Monier
Turnover	42,910,703	41,804,287	42,362,496	49,687,419	51,101,284	51,358,008
Gross profit	1,870,192	513,433	−1,053,581	2,612,791	6,531,539	7,866,840
Total assets	34,113,215	34,088,577	36,771,593	28,324,725	33,762,921	37,686,142
ROA %	1824	6639	−3490	1084	517	479
Cash ratio %	2	1	1	3	2	0
Roe %	−13	2	−6	8	22	25
Debt ratio %	31	28	37	14	17	19
Profitability of the share capital %	−33	4	−15	20	61	75

1. Source: Author’s own calculation based on data reported by http://doingbusiness.ro/financiar/?financiar=financiar and by http://www.risco.ro, https://www.listafirme.ro/