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Economic Analysis: Theory and Practice
 

Synergetic optimism: why and how much the buyers overpay in major M&A deals involving Russian companies

Vol. 13, Iss. 24, JUNE 2014

Available online: 15 June 2014

Subject Heading: INVESTING

JEL Classification: 

Pages: 31-40

Ivanov A.E. South Ural State University, Chelyabinsk, Russian Federation
ivanov.chel@list.ru

The article presents the results of a study of the largest M&A deals involving Russian companies in 2008-2012. The author sorts out and analyzes 50 largest transactions which formed goodwill in financial statements of the acquirers. The author suggests a synergetic optimism index, defined as a ratio of the goodwill value recognized in financial statements of the acquirer to the total cost of the acquisition. This index represents an assessment of acquirers' expectations regarding the synergy due to a transaction. The article also shows the ranking of the Top-10 deals with the largest values of goodwill and highest synergistic optimism index, the ranking of the Top-10 overpayment reasons for the acquired company, the dynamics of the average annual synergetic optimism index and dynamics of the average goodwill value.

Keywords: mergers and acquisitions, integration, synergetic effect, synergy, goodwill, synergistic optimism index

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