The aim of this article is to check the impact of cross-country mergers and acquisitions (M&A) on the operating profit margin. The previous article explained the methodology followed in order to achieve the objectives of this research.

1. Compare the pre and post-merger performance of selected cross-country mergers and acquisitions (M&A) deals.
2. Examine the impact of the announcement of mergers and acquisitions (M&A) on the excess returns on the shares.

To achieve these objectives, quantitative analysis was carried in a series of articles. The present article deals with the analysis of the first objective.

The previous article focused upon the need for mergers and acquisitions, i.e. the need for value creation. This value creation arises in the form of improved business operations and financial performance. The financial performance is linked to shareholder value which in turn affects the capital structure of the businesses. Generating more wealth for the shareholders can help to build a strong capital structure which is essential for long term growth of businesses (Haleblian, et al, 2009). Therefore, it is important to examine the impact of mergers and acquisitions on the wealth of the shareholders.

Synergies are a form of value addition created in merger and acquisition (M&A) activities. The value addition is a representation of the finances in the form of revenues and costs that these merged businesses can achieve. The value addition is not possible when businesses operate as separate entities. Formation of synergies can help businesses attain higher output, better placement of staff and good facilities (Ogada, Njuguna and Achoki, 2016). However, the past decade has witnessed a transformation in the formation of synergies. Traditionally, organizations merged to reduce costs or to expand their geographical presence. However, in the modern value creation process, businesses merge to expand their business capabilities into new domains (Loukianova, Nikulin and Vedernikov, 2017).

The 21st-century corporate world has witnessed the phase of globalization. It has led to technological advancement and the removal of trade barriers across countries. This is important as the competitive advantages of different organizations differ in terms of availability of raw material, investment, technology and so on. Therefore, in order to ensure long term growth potential, organizations have started forming cross country mergers and acquisitions (M&A). In contrast to the domestic mergers, cross country mergers help businesses in realizing the scope of new market opportunities. This is evident from the rise in the volume of cross border M&A.

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