Impact of acquisitions on financial performance of selected softwarecompanies in India

Abstract

The objective of the study is to examine the impact of Acquisitions on financial status of selected software companies in India. This study is based on Infosys, Panaya, CMC and TCS companies. It also estimates the pre and post-acquisition financial position of companies using financial parameters like Earning per share, Dividend per share, Return on Assets and Net Profit Margin. The period of study is for 6 years which is divided into 3 years for pre-acquisition and 3 years for post-acquisition performance. The data of Acquisitions has collected based on the financial parameters, Paired T-test has used for finding the statistical significance effect and to estimate their performance on merged companies. As the critical value is greater than the calculated value i.e.-2.919>-6.679, Rejected the Null hypothesis, i.e. there is a major difference between performance of pre and post merger as per earning per share. As the calculated value is greater than critical value i.e. 3.64 >2.919, accepted the Null hypothesis, i.e. there is no major difference in the Earning per Share. The terminal goal behind acquisition is to achieve growth in business. A well-analysed and the authentic plan will dramatically improve the chances of getting new implements to be in a competitive world. The strategic partnership of TCS-CMC and INFOSYS-PANAYA will provide few guidance for traditional players.