Synergetic advantage of strategic Mergers and Acquisitions in Pakistan

The main objective of the study is to investigate the impact of Merger & Acquisition (M & A) on financial performance of the firms. Twenty six transactions of M & A happened in Pakistan ranging from the period of 1999-2011 were analyzed. Five main financial variables like liquidity ratio, activity ratio, leverage ratio, interest coverage ratio and the profitability ratio were applied to gauge the financial performance of the firms. Sophisticated techniques like Data Envelopment Analysis (DEA) and differential tests were applied to estimate the results. The empirical results showed that the performance of post-mergers were better than pre-merger in both financial and non-financial sectors. Furthermore, it was found that the performances of financial sectors were comparatively better than non-financial sector. The merger and acquision's activity was recommended strongly in financial sector. Moreover, in non-financial sector merger and acquisition was suggested under the observations of regularity authority.