Mergers and Acquisitions: Effect on Financial Performance of Manufacturing Companies of Pakistan

This research is a study on the objectives of mergers and acquisitions, as to why organizations undertake the inorganic mode of expansion. This particular research is conducted to get the effect of mergers upon financial performance regarding acquiring firms in a variety of manufacturing industries of Pakistan. Sample of this research consists of twelve manufacturing companies involved in the process of merger during 2000-2009. Three years before and after-merger data is used to test the significance of study. Paired sample ttest statistics is applied on accounting ratios with the help of statistical software SPSS. The results of this study show that Pakistani companies are no different than the companies in other parts of the world. On the basis of findings, it is concluded that overall financial performance of acquiring manufacturing corporations insignificantly improved in after merger period. The liquidity, profitability and capital position insignificantly improved while the efficiency deteriorated in aftermerger period. It is finally concluded that merger impact on different industries of manufacturing sector differently.