The Determinants of M&A: Acquirer vs Target Firms in Indonesia

Celine Natasha Purnomo, Delon Hartanto, Juan William, Nanik Linawati

Abstract


This study aims to investigate the factors influencing the processes of merger and acquisition (M&A) in Indonesia. In this research, there were 53 companies acting as targets and 109 companies as acquirers. The dependent variable used for this study is the probability of companies, both targets and acquirers, engaging in the M&A process. The independent variables including size, profitability, leverage, revenue, capital, cash holdings, cash flow, tangible assets, and intangible assets. This research was conducted within the time span from 2015 to 2023 employing binary logistic regression. The analytical results reveal that certain independent variables significantly influence the likelihood of acquirer companies to undertake merger and acquisition processes. Specifically, size, leverage, capital, and cash holdings have a significant impact on the likelihood of acquirer companies to engage in the merger and acquisition process. Conversely, profitability, revenue, cash flow, tangible assets, and intangible assets do not significantly affect the likelihood of acquirer companies participating in the M&A process. This study provides valuable insights into the factors that influence M&A activities. It is anticipated that the findings of this research will prove beneficial for subsequent studies pertaining to the trends in M&A activities in Indonesia in the foreseeable future.


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