Long -Term Performance Of Mergers And Acquisitions Of Non-Financial Horizontal Voluntary Companies In Nigeria

Udo Akpan, Mfon Nathaniel (2021) Long -Term Performance Of Mergers And Acquisitions Of Non-Financial Horizontal Voluntary Companies In Nigeria. PhD thesis, UTAR.

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Abstract

This study primarily examined the long-term performance of Nigerian non-financial horizontal voluntary (NHV) mergers and acquisitions (M&As), because of the dearth of empirical studies on this topic in Nigeria. Voluntary M&As are observed within the non-financial sector of the economy, while involuntary M&As are mostly noticed in the financial sector. Nigeria witnessed both voluntary and involuntary M&As for over 25 years (1991-2016), followed by involuntary M&As from 2017 to 2020. Therefore, M&As companies' performance data estimation period in this study covered the 30-year period between 1991 and 2020. The four performance measures applied in the study were: 1) operating performance (OP) using the Residual Income Valuation Approach (RIV); 2) technical efficiency (TE) and 3) cost efficiency (CE) using both the Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA); and 4) productivity efficiency (PE) using the Malmquist Productivity Index (MPI). The results showed that the selected 30 bidder NHV M&A companies showed a significant positive improvement in CE and significant declines in OP, TE, and PE. Next, the selected 30 target NHV M&As companies also exhibited significant CE improvement, significant TE decline, and no significant change in OP and PE over the 30-year period. Finally, for the selected 30 non-merging companies, NHV M&As revealed a significant positive effect on CE and TE while the effect on OP and PE both were negative but insignificant. It was concluded that NHV M&A companies did not realize the expected synergy between OP, TE, and PE after M&As, but did so in terms of CE. The policy ii implication is that NHV M&As should be encouraged due to their positive impact on CE. The lack of positive implications for OP, TE and PE suggest that Nigerian NHV M&As’ should improve on technological changes before achieving any meaningful expected synergy.

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