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Are Acquisitions Worthwhile? An Empirical Study of the Post Acquisition Performance of Privately Held Belgian Companies Involved in Take-overs

38 Pages Posted: 29 May 2001  

Tine De Langhe

affiliation not provided to SSRN

Hubert Ooghe

Vlerick Leuven Gent Management School; Ghent University-Universiteit Gent - Department of Accountancy and Corporate Finance

Jan Camerlynck

Sofindev Private Equity

Date Written: December 2001

Abstract

Few studies have addressed the performance of smaller unquoted companies involved in take-overs, especially in the Continental European countries. Therefore this study addresses the post-take-over financial characteristics of privately held companies involved in 143 Belgian take-overs between 1992 and 1994. Specifically, this paper examines the financial performance of the acquiring firm after the take-over, using statistical analysis of industry-adjusted variables. Our findings show that following the take-over, the profitability, the solvency and the liquidity of most of the combined companies decline. This decline is also reflected in the failure prediction scores. With respect to the added value, take-overs are found to be accompanied by increases in the labour productivity, caused by the general improvement of gross added value per employee of Belgian companies in the last ten years and partly caused by laying off the target's workers. So it seems that, contrary to the general expectations and beliefs, take-overs usually do not seem to improve the acquirer's financial performance.

Suggested Citation

De Langhe, Tine and Ooghe, Hubert and Camerlynck, Jan, Are Acquisitions Worthwhile? An Empirical Study of the Post Acquisition Performance of Privately Held Belgian Companies Involved in Take-overs (December 2001). EFMA 2001 Lugano Meetings. Available at SSRN: https://ssrn.com/abstract=271523 or http://dx.doi.org/10.2139/ssrn.271523

Tine De Langhe (Contact Author)

affiliation not provided to SSRN

No Address Available

Hubert Ooghe

Vlerick Leuven Gent Management School ( email )

Reep 1
B-9000 Gent
Belgium

Ghent University-Universiteit Gent - Department of Accountancy and Corporate Finance

Kuiperskaai 55 E
B-9000 Ghent
Belgium

Jan Camerlynck

Sofindev Private Equity ( email )

Green Square, Lambroekstraat 5 D
Diegem, B-1831
Belgium

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