Evaluation of Success of Mergers and Acquisitions - Case Finnish Forest Companies

Abstract

The objective of this study was to find out what factors affect the success of mergers, what kind of methods there are to measure the success, and what kind of methods are used in Finnish forest companies, and how systematic the measuring is. The success of two Finnish forest industry mergers was evaluated. A framework for interviews was made on the basis of literature concerning mergers and acquisitions, and this framework was the basis in acquiring a view of the Finnish forest industry on measuring the success of mergers. The success indicators introduced in literature are partly applied in the latter part of the study and the success of the mergers is evaluated. The most significant factors influencing mergers according to the interviewees were the consolidation of the entire industry and the company's own strategy. Measuring the success of the merger was considered to be problematic and there seemed to be no consistent practice. The numerical evaluation implies that both studied companies have reached economies of scale in total costs. According to the calculations the profitability of the firms has developed into favourable direction after the mergers and also shareholders have got benefits through increased dividends.