Trends and Determinants of Mergers and Acquisitions in the Manufacturing Sector in India

Abstract

This article discusses the strategic rationale and impact of mergers and acquisitions (M&A) that have impacted the manufacturing sector for the years 2004-2022. It is meant to bridge the research gap in the knowledge of the role of non-financial measures such as stake percentage and business value in such transactions. The research employs a mixed-method and a rich set of data of 20 years of M&A deals. It examines the connection between the deal size and other financial and non-financial factors. The results contradict the traditional assumptions, which show that financial measures such as revenue, EBITDA and PAT do not affect the size of M&A deals. Rather, the percentage of stake and business value become the most important factors, which point to the strategic reasons of M&A decisions. The paper also reveals that there are different M&A dynamics in various manufacturing sub-sectors, which depict different strategic goals. The findings highlight the complexity of M&A activities, which are more influenced by strategic needs of entering the market and technological improvement rather than the financial ones. Such insights are essential to the industry stakeholders in order to make informed investment and strategic plans, which explains the significance of both financial and non-financial aspects of M&A transactions. The paper ends by requesting more studies to be conducted on long-term effects and qualitative nature of M&A to gain more insight into its transformational effects on manufacturing industry.