Mergers and Acquisitions Success criteria for assessment of M&A outcomes

Moini and Wang (2012) define five M&A performance metrics:

Event studies (measures based on stock market): Since the seventies, event studies have been a popular approach, extensively utilized in research on mergers and acquisitions. The approach is created for measuring whether an abnormality exerts an impact on stock price linked to an unforeseen occurrence (M&A), which maintains that returns on stocks indicate swift, impartial, risk-adjusted, and sensible expectations of company value in the imminent period on the basis of appearance of novel facts. Field experts normally outline an event window or period over which event effect will be calculated. They attempt to estimate the failure or success of the acquiring company in capturing value for shareholders via the M&A (Wang & Moini, 2012).

Accounting-based measures: These performance measures also require a long-run outlook of performance of the acquisition (such as a long-range event study); however, they represent genuine realized (i.e., ex-post) returns. This often entails comparing accounting measures before and after a takeover. These analyses are based on the logic that an enterprise's strategic objective is earning a reasonable ROC (return on capital); the company's financial statement will, ultimately, indicate any benefit that arises from a takeover (Wang & Moini, 2012) (Tuch & O'Sullivan,...

Perceived performance of managers: Here, managers are required to rate the extent of their realization of primary goals numerous years following M&A completion. Both non-financial and financial ratios can be utilized for defining these primary goals (Wang & Moini, 2012).
1. Assessment of expert informants: Here, the approach is basically similar to management assessment; the difference is shift in respondents -- i.e., expert informants. Direct data procured from professionals who conduct security analyses is utilized by some scholars (Hayward, 2002); they also directly obtain data from commentary and financial report ratings (Wang & Moini, 2012).

1. Divestment measure: This strategy evaluates M&A outcomes through ascertaining whether or not subsequent divestment of an acquired company has taken place. The rationale here is that divestment of merged firms occurs if the performance of acquired company falls short of expectations (Ravenscraft & Scherer, 1987).

2 - M&As in the semiconductor industry

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