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Do Romanian Mergers Really Create Value?

Author

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  • Anca-Simona HROMEI

    (Doctoral School of Economics and Business Administration, ‘Alexandru Ioan Cuza’ University of Iasi, Romania)

Abstract

The realities of our modern society demonstrate that businesses operate in a competitive environment, which requires continuous improvement and development of production and sales. In this context, for financial, economic and fiscal reasons, companies resort to a process of concentration, through the merger of all the factors involved in the fulfilment and diversification of their activities. Often, the reasons for engaging in a merger refer to the fact that two merged companies create, in terms of value, an entity that exceeds the individual values of the two participants if they were to continue to activate separately. This paper aims at analysing whether the well-known relationship ‘1+1=3’, which describes merger synergies, applies at the Romanian level. For this reason, each of the values of 77 merged companies were compared with the sum of the individual values of the firms that initially created them. It was found that 56% of the mergers analysed generated added value for shareholders.

Suggested Citation

  • Anca-Simona HROMEI, 2015. "Do Romanian Mergers Really Create Value?," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 9, pages 59-62, December.
    • Handle: RePEc:cmj:seapas:y:2015:i:9:p:59-62
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    References listed on IDEAS

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    1. Anca-Simona HROMEI, 2014. "The Influence Of Mergers On The Medium-Term Financial Performance Of Romanian Companies," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 5, pages 333-340, November.
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      More about this item

      Keywords

      Merger; Synergy; Company Valuation; Net Assets Method;
      All these keywords.

      JEL classification:

      • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
      • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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