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Are Acquisitions Worthwhile? An Empirical Study of the Post-Acquisition Performance of Privately Held Belgian Companies

  • Hubert Ooghe

    ()

  • Elisabeth Laere
  • Tine Langhe

Few studies have addressed the performance of smaller unquoted companies involved in acquisitions, especially in Continental European countries. Therefore this study addresses the post-acquisition financial characteristics of privately held companies involved in 143 Belgian acquisitions between 1992 and 1994. Specifically, this paper examines the financial performance of the acquiring firm after the acquisition, using statistical analysis of industry-adjusted variables. Our findings show that following the acquisition, the profitability, the solvency and the liquidity of most of the combined companies decline. This decline is also reflected in the failure prediction scores. With respect to the added value, acquisitions are found to be accompanied by increases in the labour productivity, but this is caused by the general improvement of gross added value per employee of Belgian companies in the last 10 years. So it seems that, contrary to the general expectations and beliefs, acquisitions usually do not seem to improve the acquirer’s financial performance. Copyright Springer 2006

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File URL: http://hdl.handle.net/10.1007/s11187-006-0011-1
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Article provided by Springer in its journal Small Business Economics.

Volume (Year): 27 (2006)
Issue (Month): 2 (October)
Pages: 223-243

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Handle: RePEc:kap:sbusec:v:27:y:2006:i:2:p:223-243
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100338

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  1. Charles Brown & James L. Medoff, 1987. "The Impact of Firm Acquisitions on Labor," NBER Working Papers 2273, National Bureau of Economic Research, Inc.
  2. A Cosh & P Guest & A Hughes, 2001. "Managerial Discretion and Takeover Performance," ESRC Centre for Business Research - Working Papers wp216, ESRC Centre for Business Research.
  3. Jan Camerlynck & Hubert Ooghe & Tine Langhe, 2005. "Pre-Acquisition Profile of Privately Held Companies Involved in Take-Overs: An Empirical Study," Small Business Economics, Springer, vol. 24(2), pages 169-186, 03.
  4. Hulle, Cynthia Van & Vermaelen, Theo & Wouters, Paul de, 1991. "Regulation, taxes and the market for corporate control in Belgium," Journal of Banking & Finance, Elsevier, vol. 15(6), pages 1143-1170, December.
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