Operational Efficiency Post-Merger and Acquisition: Evidence from Indian Firms

This study analyzes the operational efficiency of Indian firms that underwent mergers and acquisitions (M&As) during the fiscal years 2016–2017 and 2017–2018, using data from 2013–2014 to 2021–2022. By employing stochastic frontier analysis (SFA), the research compares the productivity of 454 companies resulting from these mergers. The analysis identifies key factors influencing optimal performance and highlights that, although operating margins were negatively impacted before M&As but after the M&As, only a small subset of companies experienced significantly detrimental effects. Conversely, the majority showed improvements in operating margins, driven by synergies from resource integration. This finding suggests that M&As can generate long-term positive outcomes for companies, contributing to broader economic benefits. Additionally, the study emphasizes the critical role of firm-specific factors such as operating margin, turnover, and OROA in determining the post-M&A operational performance of firms. In a nutshell, the research highlights the importance of these factors in enhancing the operational efficiency of firms after M&As.