Publication detail

Prediction of Synergies in Mergers

REŽŇÁKOVÁ, M. PĚTA, J. KARAS, M.

Original Title

Prediction of Synergies in Mergers

Type

journal article in Web of Science

Language

English

Original Abstract

In this paper we present a method of calculating the value of synergy resulting from mergers between private companies as well as a model for the prediction of potential synergy values in contemplated mergers (M&A deals). We first examined the process of determining the value of a synergy. Since we analysed mergers involving private mechanical engineering companies, we used the discounted capital cash flow method for the determination of the synergy value. We divided the selected mergers according to the achieved synergy value into two groups, i.e. into successful mergers and failed mergers. We then analysed the two groups in order to identify financial ratios with statistically significant differences (deviations). We then used those ratios to establish a rule for the differentiation between mergers that would increase in business value, i.e. with positive synergy, and those whose value would decrease. A decision rule was developed using the classification and regression trees method. In the research sample, the developed model distinguished successful merger from failed ones with 92% accuracy.

Keywords

mergers in mechanical engineering, operating synergies, capital cash flow, value of synergies, classification and regression trees

Authors

REŽŇÁKOVÁ, M.; PĚTA, J.; KARAS, M.

Released

25. 3. 2020

Publisher

Ekonomický ústav SAV

Location

Bratislava

ISBN

0013-3035

Periodical

Journal of Economics

Year of study

68

Number

2

State

Slovak Republic

Pages from

168

Pages to

187

Pages count

20

URL

https://www.sav.sk/journals/uploads/0325114602%2020%20Reznakova%20+%20SR.pdf

BibTex

@article{BUT163964,
  author="Mária {Režňáková} and Jan {Pěta} and Michal {Karas}",
  title="Prediction of Synergies in Mergers",
  journal="Journal of Economics",
  year="2020",
  volume="68",
  number="2",
  pages="168--187",
  issn="0013-3035",
  url="https://www.sav.sk/journals/uploads/0325114602%2020%20Reznakova%20+%20SR.pdf"
}