Evaluate the Financial Performance of Pre and Post Mergers and Acquisitions during the Covid

Abstract

Mergers and Acquisitions have become one of the most widely adopted strategies for the reorganization of companies, particularly during uncertain times. It is a game-changing event that creates a more positive impact in terms of growth and structural changes in the business. This study evaluates the financial performance of selected companies before and after mergers and acquisitions during the COVID-19 pandemic. Data has been collected for 5 selected companies that underwent M&A during 2020 and analysed for the period from 2016-17 to 2023-24. The primary objective of M&A is to expand businesses and achieve growth during a period that proved to be critical for sustainability. M&A deals declined as companies prioritized survival amid economic uncertainty.
However, a few companies pursued M&A and were successful in meeting strategic needs and achieving post-pandemic growth. This study aims to analyze and compare the financial performance of companies involved in M&A during 2020 and to assess how successful they became post their strategic alliance. Key financial variables are analyzed to capture the changes before and after M&A and tested using the Paired t-test. The statistical results show that the Current Ratio and Quick Ratio demonstrated significant improvement, with p-values of 0.02 and 0.01, respectively, post-M&A. In addition, the Debt-Equity Ratio and Return on Assets also showed statistically significant changes with p-values of 0.000 and 0.02, respectively, post-M&A. The overall findings of this study reflect that there is consistent improvement and stability in financial performance post-M&A; however, profitability and market valuation outcomes did not show significant changes.