Template-Type: ReDIF-Paper 1.0

Author-Name: Marianna Endresz
Author-X-Name-First: Marianna
Author-X-Name-Last: Endresz
Author-Email: endreszm@mnb.hu
Author-Workplace-Name: Magyar Nemzeti Bank (Central Bank of Hungary)

Author-Name: Peter Gabriel
Author-X-Name-First: Peter
Author-X-Name-Last: Gabriel
Author-Email: gabrielp@mnb.hu
Author-Workplace-Name: Magyar Nemzeti Bank (Central Bank of Hungary)


Title: Impact of Acquisitions on Firms’ Performance
Abstract: This paper estimates the impact of acquisitions on various firm-level performance measures of Hungarian firms. Using
difference-in-differences estimation with matching, we show that the performance of the acquirer improves significantly
following an acquisition. By controlling for the – typically weaker – efficiency of the target, we also estimate the overall
efficiency gain. Our results indicate that acquisitions are powerful tools to improve efficiency in the Hungarian economy.
The estimated impacts are heterogeneous. Efficiency gains are higher if the acquirer is smaller and less efficient prior to
the acquisition, highlighting that improving scale efficiency is an important motive for acquisitions. Furthermore, if the
acquirer and target companies had business links beforehand, the productivity gain is twice as large. Acquisitions made
during recessions are also different in some ways. Firms make fewer acquisitions, although the number of potential
target companies increases. Because acquirers become more selective, the efficiency gains remain sizeable even in the
unfavourable business environment.

Length: 43 pages
Creation-Date: 2024
File-URL: https://www.mnb.hu/kiadvanyok/elemzesek-tanulmanyok-statisztikak/mnb-fuzetek/wp-2024-3-marianna-endresz-peter-gabriel-impact-of-acquisitions-on-firms-performance
File-Format: Application/pdf
Number: 2024/3
Classification-JEL: C22, D22, D24
Keywords: mergers, acquisitions, efficiency, productivity, matching
Handle: RePEc:mnb:wpaper:2024/3