Long-Term Post-Merger Performance of Firms in India

Mergers and acquisitions (M&As) are now an important element of corporate strategy in India. The long-term firm performance outcomes of mergers in India are still not clear, due to only a very limited amount of literature published on this subject. The hypothesis, based on consideration of the Indian economic context, that mergers in India have resulted in improved long-term post-merger firm operating performance through enhanced efficiency, is validated in this study, which finds increasing cash flow returns at an annual rate of 4.3 per cent post-merger. This improved operating cash flow return is on account of improvements in the post-merger operating margins of the firms, though not of the efficient utilization of the assets to generate higher sales. This study helps to further our understanding of this yet nascent field of research on this form of corporatelevel strategy in India.