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M&As in Croatia - Operating Performance of Publicly Listed Firms Following Takeover

Mergers and acquisitions (M&As) are one of the most widely used means in achieving growth and development of firms. There have been numerous empirical studies questioning the success of M&As in increasing the firms’ value for their owners, both in the short and long run, and in increasing operational efficiency of the newly established system. Even though varying in methodology, sample size and structure, monitored time and geographical spread, the majority of research indicate that many M&As fail in accomplishing described criteria, i.e. that they do not increase the firm’s business success. Among the reasons of M&As failures most frequently cited are: overpaying the target, inadequate due diligence, mistakes in corporate strategy, difficulties and lack of speed in the processes of post acquisition coordination and integration of the two former firms into one economic system. However, the post- acquisition performance of target firms is relatively neglected and unexplored. From the Croatian perspective, analyses of the success of target firms following the takeover seem to be relevant and needed. Statistic data shows that Croatian firms participate in cross- border M&As mainly as takeover targets. The privatisation process of state owned firms is to some degree still active and unfinished. Furthermore, takeovers are frequently viewed as an attempt to avoid bankruptcy of under performing firms. This paper focuses on analysing operational efficiency gains of Croatian firms taken over after the year 2000. On the sample of publicly listed firms, the author analyses a seven-year time spread (two years prior and five-year following the takeover). The gathered data compares relative values of assets, equity capital, staff turnover, labour productivity and profits/losses of sample firms. The results of analyses add some light to the relatively neglected post-acquisition performance of target firms, and provide a better understanding of the M&As processes in Croatia and other developing countries with similar economic background.

mergers and acquisitions, reasons for M&As failures, business success of overtaken Croatian firms

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