№ 4/2017

Fìnansi Ukr. 2017 (4): 104–120

FINANCES OF THE INSTITUTIONAL SECTORS

DERUN Ivan ¹, SKLIARUK Iryna ²

¹Taras Shevchenko National University of Kyiv
²Taras Shevchenko National University of Kyiv

Analytical framework for mergers and acquisitions of industrial companies in Ukraine

The paper deals with M&A features of industrial companies. The study determines theoretical approaches of M&A operations of domestic and foreign scientists. The main factors, motives and types of M&A process are generalized. The authors show the statistics on the number of M&A worldwide and in Ukraine. Methodical approaches of comprehensive M&A analysis are offered. The authors propose the model for the assessment of the need for M&A and effectiveness of their implementation for Ukrainian industrial companies. The proposed model includes the following stages: assessment of the target company financial condition based on public financial reports; analysis of the company goals based on internal data; analysis of M&A effectiveness based on synergy estimates. The authors identify key indicators of M&A financial analysis, in particular: ratios of financial position (liquidity and solvency, financial sustainability, profitability, business activity, etc.) and indicators of analysis of internal accounting information and analytical support (break-even point, weighted average cost of capital (WACC), the effect of financial leverage, etc.). The study examines possibilities of creating the company’s value as a result of mergers and acquisitions due to the synergy effect. The essence of synergy concept and its characteristics are considered; the potential sources of synergy with mergers and acquisitions are systematized. The article highlights the main benefits of synergy, general parameters of impact on its assessment and expected value and elements of the M&A strategy from the perspective of planning and considering the strategic plan of the company.

Keywords:merger and acquisition (M&A), financial analysis, costs of capital, the market value of the company, synergy, effect of synergy, sources of synergy.

JEL: G32, G34, M21.

Derun I. . Analytical framework for mergers and acquisitions of industrial companies in Ukraine / I. Derun, I. Skliaruk // Фінанси України. - 2017. - № 4. - C. 104-120.

Article original in Ukrainian (pp. 104 - 120)

Download

Downloads :284

1. Institute for Mergers, Acquisitions & Alliances. (2015). M&A Statistics. Retrieved from imaa-institute.org/statistics-mergers-acquisitions/.
2. Investment Portal Invanture. (2016). Database of mergers and acquisitions in Ukraine (M&A Ukraine). Retrieved from inventure.com.ua/tools/database/m%26a [in Russian].
3. The Statistical Portal. (2015). Number of merger and acqusition (M&A) deals in Ukraine from 2011 to 2014. Retrieved from www.statista.com/statistics/415141/m-and-a-ukraine-number-of-deals/.
4. The Statistical Portal. (2015). Total value of merger and acqusition (M&A) transactions in Ukraine from 2011 to 2014. Retrieved from www.statista.com/statistics/415145/m-and-a-ukraine-aggregate-value-of-deals/.
5. The Statistical Portal. (2015). Largest merger and acqusition (M&A) deals in Ukraine in 2014, by deal value. Retrieved from www.statista.com/statistics/415150/m-and-a-ukraine-value-deals/.
6. Weber, Y., Tarba, S. Y., & Bachar, Z. R. (2011). Mergers and acquisitions performance paradox: the mediating role of integration approach. European Journal of International Management, 5(4), 373-393. doi:
10.1504/EJIM.2011.040911.
7. Hamma, T. M. (2016). Characteristics and prospects of M&A market in Ukraine. Bulletin of Mukachevo State University, 1 (5), 106-112 [in Ukrainian].
8. Evans, F. C., Bishop, D. M. (2016). Valuation for M&A: Building value in private companies. Moscow: Al`pina Pablisher [in Russian].
9. Kalinowska, A., Mielcarz, P. (2014). Methods of payment in M&A transactions and the operational performance of acquirers. SSRN, 67, 739-746.
10. Ky`ry`chenko, O. A., Vahanova, E. V. (2009). Certain aspects of companies’ mergers and acquisitions in the context of building new integrational system of economy. Actual Problems of Economics, 2 (92), 45–56 [in Ukrainian].
11. Cohen, L. M. (2010). Physical assets in the M&A mix: A strategic option. Journal of Business Strategy, Vol. 31, Iss. 6, 28-36. doi:
10.1108/02756661011089053.
12. Maksy`menko, A. V. (2013). Trends and strategic motives of multinational corporations’ mergers and acquisitions. Economic Annals-XXI, 9-10 (1), 11-14 [in Ukrainian].
13. Marks, M. L., Mirvis, P. H. (2011). Merge ahead: A research agenda to increase merger and acquisition success. Journal of Business and Psychology, Vol. 26, Iss. 2, 161-168. doi:
10.1007/s10869-011-9219-4.
14. Nazarova, V. (2015). An analysis of the effectiveness of the M&A strategy of a diversied company (Unilever Group case study). International Business Management, 9 (1), 41-53.
15. Chen, C. H., Lin, M. J. J. (2009). An assessment of post-M&A integration influences on new product development performance: An empirical analysis from China, Taiwan, and HK. Asia Pacific Journal of Management, 28 (4), 807-831. doi:
10.1007/s10490-009-9173-0.
16. Skorobohach, O. (2011). Status and trends in process of mergers and acquisitions in Ukrainian banking system. Herald of the Ukrainian Academy of Banking, 1 (30), 62-66 [in Ukrainian].
17. Musіj, Ya. M. (2013). Main features of mergers and acquisitions in the EU banking sector: implications for Ukraine. Economic Analysis, 13, 223-229 [in Ukrainian].
18. Ogier, T, Rugman, J., & Spicer, L. (2007). The real cost of capital: A business field guide to better financial decisions. Dnepropetrovsk: Balans Biznes Buks [in Russian].
19. Brigham, E. F., Ehrhardt, M. C. (2007). Financial management: Theory and practice. St. Petersburg: Piter [in Russian].
20. Brealey, R. A., Myers, S. C. & Allen, F. (2015). Principles of corporate finance. Concise edition. Moscow: Williams [in Russian].
21. Sirower, M. L. (2000). The synergy trap: How companies lose the acquisition game. New York: The Free Press.