Do mergers and acquisitions create sustainable shareholder value?

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Carr, Fionn
Issue Date
MBA in Finance
Dublin Business School
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Merger and acquisitions have been a restructuring strategy incorporated by companies to drive growth, increase access to capital markets, create synergies and improve operating efficiency. However history would show us that the results of this strategy in terms of driving true shareholder value has been mixed, for both the target and acquiring firm. This thesis will critically evaluate the underlying motivations of various companies in their attempt to achieve successful returns to shareholders through this corporate restructuring activity. The researcher presents primary data in the source of three in-depth interviews with corporate management that have had various results with an M&A activity in an Irish context. This data will be blended with the secondary data presented on the subject to provide a framework for ascertaining the key driving and motivating factors for entering into an M&A and how they impact the outcome. This data will be evaluated in combination with certain environmental factors that will be brought into consideration such as merger momentum to provide conclusive evidence on how positive drivers such as the creation of true operating synergies and more intangible factors as human capital play a more salient role in the success of such M&A’s. The question that will be hypothesized will be whether or not true sustainable shareholder value is invariable created through this activity or whether markets invariable overestimate the returns to shareholders particularly of the target firm in the short term creating transient that eventually disappears. Author keywords: M&A, mergers and acqusitions, shareholder value