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Empirical analysis of risks’ influence on the large mergers and acquisitions projects’ success in modern companies
 
PIIS042473880024877-3-1
DOI10.31857/S042473880024877-3
Publication type Article
Status Published
Authors
Marina Gracheva 
Occupation: Professor
Affiliation: Economics Faculty, Lomonosov Moscow State University
Address: Moscow, Russia
Natalia Utemova
Affiliation: Economics Faculty, Lomonosov Moscow State University
Address: Russia
Journal nameEkonomika i matematicheskie metody
EditionVolume 59 No. 1
Pages79-92
Abstract

Mergers and acquisitions (M&A) are among the key strategies for stabilizing and strengthening a company's market position in an unstable economic environment and gaining a competitive advantage from inorganic growth. Doing so, big M&A deals show a higher risk of failing, being terminated, or being incomplete, which can lead to financial, reputational, and time losses. Due to these factors, prudent risk-management of such transactions is necessary, including the evaluation of the degree to which various risk groups influence M&A success. This paper evaluates big (those the value of which exceeds 10 billion euros) M&A projects risks influence on the success of the deal closure quantitatively and offers recommendations for managing significant risks using the project methodology. The analysis includes probit-regressions on a wide sample of 24 countries and 10 amalgamated industries. As a result, five risk groups appear significant: risk of transaction's hostile nature; cross-country risks; risk of misjudging the transaction value; risks associated with the size ratio of target and acquiring companies; risk of delaying the terms of the deal. Transnational mergers and acquisitions demonstrate a stronger influence of all significant risks on the transaction's success. The paper provides recommendations for managing significant risks using the project methodology.

Keywordsmergers and acquisitions, risk management, project management, project risks
Received16.03.2023
Publication date29.03.2023
Number of characters32631
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