Mergers and Acquisitions Essay

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Mergers and Acquisitions Essay

Written Assignment

Format

  • Double spaced, with 12 point Times New Roman font and a minimum of 1” margin from all sides).
  • For the full sample of M&A events, use the excel file, “MA events with CAR.”
  • For the detailed description of variables, refer to the “pdf.”
  • For sample research papers, please read Sample 1, and Sample 2.
  • Note:
  • Please add the reference list if you cite a paper or extract it from a website.
  • You can obtain electronic copies of annual reports from EDGAR (Electronic Data Gathering, Analysis, and Retrieval; http://www.sec.gov/edgar/searchedgar/companysearch.html). EDGAR performs automated collection, validation, indexing, and forwarding of submissions by companies and others who are required by law to file forms with the SEC.

Part A. Short-term market reaction to the M&A – how do investors respond to M&A announcement?

Required: Prepare a 3 pages paper that summarizes your finding. Please spend pages1- 2 for writing and page 3 for tables or figures.

Outline:

  1. Introduction – Full-sample analysis
  • Clearly define the full sample events provided (time period, data source: GSI online)

See Sample 1 (section 2. Sample Selection) as an example of defining the sample.

  • Summarize the statistics (n, mean, first quartile (25%), median (50%), third quartile (75%)) of the two-days cumulative abnormal return from the announcement date (CAR01) for the acquirer.
  1. Main – Sub-sample analysis
  • Choose any sub-sample based on the variables provided (e.g., time period, deal specification, transaction value, etc.). Pick 50 M&As from the sub-sample.
  • Clearly define your sub-sample.
  • Summarize the statistics of CAR01 for the acquirer.
  • Compare the mean and median of CAR01 of your sub-sample and the full sample.
  1. Conclusion – Interpretation and discussion of your findings (i.e., why does your sub-sample show higher or lower M&A announcement return compared to the full sample?).

Part B. Are M&As successful in the long-term?

Required: Prepare a 2 pages paper that answers the following questions as much as you can.

Pick one M&A event from the excel file or from your search.

  • What is the type of M&A?
  • What are the expected benefits of the M/A? (e.g., any synergy effects)
  • How did the acquirer account for the acquisition (goodwill/gain)?
  • How did the acquiree account for the acquisition (gain/loss)?
  • Are there any details/disclosures about the valuation of assets & liabilities?
  • How does operating performance change in the long-term? (e.g., EPS, ROA/ROE changes before and after the M&As)
  • Are M&As successful in the long-term?

Students are required to find actual disclosures (news articles and SEC filings). You can find the SEC Form “425” or “8-K” after the announcement date. Example: https://www.sec.gov/Archives/edgar/data/41499/000116923205000340/d61995_425.htm