Financial Analysis of Takeovers

In the recent times mergers and takeovers have generated considerable interest in the Indian corporate sector. Takeovers are of different forms. Some of them involve straight takeover of one company by the other though the acquisition of shares and decision to operate the company as an independent entity. In some other cases, takeovers may be to the extent of capturing the controlling ownership in a company. A third variety in this is that sick companies are taken over by the healthy companies for the revival. For the purpose of this study, the third variety of the sample units have been, selected. In India the research studies on takeovers are very few. Little is done from the point of view of establishing the fact that whether takeovers are able to produce results and thus they can be supported by the Government and others as a useful economic activity. More so in the context of turning around of sick units, takeover is considered to be an useful strategy. In this context, the present study aims at concentrating on the aspects relating to performance of the units being takeover by the new managements. In this study an attempt is made to compare the performance of firms before and after the takeover through the financial parameters like liquidity, leverage and profitability.