Mergers and acquisitions : identifying major financial factors affecting level of M&A activity.

• Main Authors: Lim, Wei Jian., Hoe, Meng Wee., Yong, Cheryl Ke Xin.
• Other Authors: Nanyang Business School
• Format: Final Year Project
• Language: English
• Published: 2010
• Subjects: DRNTU::Business
• Online Access: http://hdl.handle.net/10356/35257
• Institution: Nanyang Technological University

Given the increasing importance of Mergers and Acquisitions (M&A) in driving corporate development, this paper seeks to explore and identify the major financial factors that have an impact on the level of M&A activity. 2. Methodology Primary data on examined factors were obtained from Bloomberg and analyzed statistically using SPSS. Secondary data sources included books and journal articles. 3. Findings Rising stock market index has a positive influence on the dollar volume of M&A transactions. With time lag, a lower cost of borrowing in the corporate debt markets is found to be an important factor in driving M&A growth. Higher market P/E ratios in the broad markets appear to be non-conducive to M&A deal making. Qualitative considerations such as synergy, growth and diversification etc are examined as well to provide a more balanced viewpoint. 4. Suggestions for further research Identify other potential financial factors that may affect the level of M&A activity. Study the relevance of our research to specific industries/sectors and identify how industry dynamics can support or invalidate our research conclusion. Examine the validity of the qualitative factors discussed in the current economic climate through the use of case study techniques.