Corporate acquisitions and measurement of its impact on performance: An application of evaluating the impact of acquisitions on the operatingl performances of listed companies in Turkey

The purpose of this study is to measure the operational performance of the mergers for a 5 year period during 2004-2008 of the companies whose shares are traded at the Istanbul Stock Exchange from the aspects of profitability, liquidity, financial structure, growth and efficiency and to analyze the effect of the sector of operation, the type of merger (horizontal, vertical, mixed), the respective sizes of the acquirer and the acquired company and the attribute of the company that is taken over (whether it is open to public or not) on the performance of the merger. In this respect, the performance before and after 26 mergers which were realized during the 5 year period between 2004-2008 are taken into account from a perspective of 1 year before and 3 years after (t-1 and t+3) the merger. In this context, in this study the answers to the following questions are searched: (i) Has the operational performance of the companies after the merger (from the aspects of profitability, liquidity, financial structure, growth and efficiency ratios) shown a positive progress in comparison to the indicators before the merger? (ii) Do the sector of operation, the type of merger (horizontal, vertical, mixed), the respective sizes of the acquirer and the acquired company and the attribute of the company that is taken over (whether it is open to public or not) have a positive effect on the indicators of operations after the merger? In this respect, according to the performance criteria given above, the merging firms arre compared with each other and their control group firms, before and after the merger. According to the analysis, it is concluded that liquidity (operating cash flow rate) decreases in a statistically significant pattern. On the other hand, although not found as statistically meaningful, it is observed that after the merger, profitability increases, financial structure gets stronger and efficiency ratios get better. Finally, though could not be statistically verified, it is observed that horizontal mergers are more successful than non horizontal (vertical and mixed) ones in terms of profitability, financial structure and efficiency, whereas big mergers are more successful than the small ones and public company mergers are more successful than non-punlic company mergers only in terms of financial structure and efficiency.