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Synergies of Mergers Identification in Mechanical Engineering Companies
Pěta, Jan ; Hrvolová, Božena (referee) ; Sedláček, Jaroslav (referee) ; Živělová, Iva (referee) ; Režňáková, Mária (advisor)
The dissertation deals with different approaches to determining the value of synergies of companies implementing mergers in the mechanical engineering industry in the Czech Republic. This topic was chosen because of the high number of mergers, as well as the failure to achieve the effects planned. As a result, the consequence of such transactions is not the expected value growth for the owners. In the theoretical part of the thesis, mergers are defined from a legal point of view, and the historical development in the studied area is described. Based on the results of previous research, the systematization of the motives of mergers was carried out. The most common reason is the planned economic benefits in the form of cost savings or revenue growth. This part also describes the merger efficiency evaluation procedures used in previous research. Two approaches were identified, the first based on financial analysis indicators, and the second on discounted cash flow. The main objective of the dissertation is to propose adjustments to the procedure of valuation of companies implementing mergers in order to make it possible to identify the formation of synergy. Therefore, the data of companies operating in the mechanical engineering industry from 2004 to 2011 was used. As part of factor research, statistical tests of significance and dependence were used; the methods of classification and regression trees, as well as the linear regression model, were used to predict synergy. First, using the revenue indicators and operating profit, the transactions were divided into successful mergers and unsuccessful mergers. Based on this division, statistically significant differences in the financial analysis indicators were identified between companies implementing successful and unsuccessful transactions. Statistically significant differences were identified in the indicators of labour cost to revenues, depreciation to revenues and asset turnover ratio. All of the companies examined (target, bidder and newly created) were valued using the discounted capital cash flow method. Based on this valuation, factors that affect the value of the synergy achieved before implementation of the merger were identified. The indicators of return on assets, short-term financial assets to assets, cash flow to assets, and cash flow to interests were identified as statistically significant. These indicators were subsequently used to create prediction models. The first model predicts whether synergies will be achieved, and the second model predicts what the value of the synergies will be. The second model was subsequently incorporated into the pre-merger company valuation model
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Synergies of Mergers Identification in Mechanical Engineering Companies
Pěta, Jan ; Hrvolová, Božena (referee) ; Sedláček, Jaroslav (referee) ; Živělová, Iva (referee) ; Režňáková, Mária (advisor)
The dissertation deals with different approaches to determining the value of synergies of companies implementing mergers in the mechanical engineering industry in the Czech Republic. This topic was chosen because of the high number of mergers, as well as the failure to achieve the effects planned. As a result, the consequence of such transactions is not the expected value growth for the owners. In the theoretical part of the thesis, mergers are defined from a legal point of view, and the historical development in the studied area is described. Based on the results of previous research, the systematization of the motives of mergers was carried out. The most common reason is the planned economic benefits in the form of cost savings or revenue growth. This part also describes the merger efficiency evaluation procedures used in previous research. Two approaches were identified, the first based on financial analysis indicators, and the second on discounted cash flow. The main objective of the dissertation is to propose adjustments to the procedure of valuation of companies implementing mergers in order to make it possible to identify the formation of synergy. Therefore, the data of companies operating in the mechanical engineering industry from 2004 to 2011 was used. As part of factor research, statistical tests of significance and dependence were used; the methods of classification and regression trees, as well as the linear regression model, were used to predict synergy. First, using the revenue indicators and operating profit, the transactions were divided into successful mergers and unsuccessful mergers. Based on this division, statistically significant differences in the financial analysis indicators were identified between companies implementing successful and unsuccessful transactions. Statistically significant differences were identified in the indicators of labour cost to revenues, depreciation to revenues and asset turnover ratio. All of the companies examined (target, bidder and newly created) were valued using the discounted capital cash flow method. Based on this valuation, factors that affect the value of the synergy achieved before implementation of the merger were identified. The indicators of return on assets, short-term financial assets to assets, cash flow to assets, and cash flow to interests were identified as statistically significant. These indicators were subsequently used to create prediction models. The first model predicts whether synergies will be achieved, and the second model predicts what the value of the synergies will be. The second model was subsequently incorporated into the pre-merger company valuation model
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