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Mergers and acquisitions based on DEA approach

Author

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  • Jie Wu
  • Qingxian An
  • Liang Liang

Abstract

Mergers and acquisitions (M&As) have become a more and more important topic in the management and development of companies. Companies usually conduct M&A to preserve or extend their competitive advantages. However, M&As usually fail in real life. For the given bidder company, a critical step to the success of M&A activities is the appropriate selection of target companies. Previous studies rarely considered the profile of the bidder company and its compatibility with candidate target companies. Although data envelopment analysis (DEA) has been applied in M&A, previous studies in this area haven't discussed the selection. In this paper, DEA was applied to support the decision making of mergers and acquisitions for decision making units (DMUs), i.e., the companies. We established a greedy algorithm to implement the selection process. This approach can make up the deficiencies of previous studies in some degree because it considers bidder and target company simultaneously.

Suggested Citation

  • Jie Wu & Qingxian An & Liang Liang, 2011. "Mergers and acquisitions based on DEA approach," International Journal of Applied Management Science, Inderscience Enterprises Ltd, vol. 3(3), pages 227-240.
    • Handle: RePEc:ids:injams:v:3:y:2011:i:3:p:227-240
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    Citations

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    Cited by:

    1. Jaroslav Sedláček & Eva Hýblová & Petr Valouch, 2015. "Motives for Combinations of Trading Companies," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 63(1), pages 271-280.
    2. Hai-Liu Shi & Ying-Ming Wang & Sheng-Qun Chen & Yi-Xin Lan, 2017. "An approach to two-sided M&A fits based on a cross-efficiency evaluation with contrasting attitudes," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(1), pages 41-52, January.
    3. Wanke, Peter & Maredza, Andrew & Gupta, Rangan, 2017. "Merger and acquisitions in South African banking: A network DEA model," Research in International Business and Finance, Elsevier, vol. 41(C), pages 362-376.
    4. Peter Wanke & Carlos P. Barros & Md. Abul Kalam Azad & Dercio Constantino, 2016. "The Development of the Mozambican Banking Sector and Strategic Fit of Mergers and Acquisitions: A Two†Stage DEA Approach," African Development Review, African Development Bank, vol. 28(4), pages 444-461, December.
    5. Chang, Tsung-Sheng & Lin, Ji-Gang & Ouenniche, Jamal, 2023. "DEA-based Nash bargaining approach to merger target selection," European Journal of Operational Research, Elsevier, vol. 305(2), pages 930-945.
    6. Michael Nofer & Oliver Hinz & Jan Muntermann & Heiko Roßnagel, 2014. "The Economic Impact of Privacy Violations and Security Breaches," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 6(6), pages 339-348, December.
    7. Ivica Petrikova & Melita Lazell, 2022. "“Securitized” UK aid projects in Africa: Evidence from Kenya, Nigeria and South Sudan," Development Policy Review, Overseas Development Institute, vol. 40(1), January.

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