Impact of Mergers and Acquisitions on Working Capital Structure of Manufacturing Companies in India

Abstract

This study explores the influence of mergers and acquisitions on the working capital structure of manufacturing companies in India during the period of 2004 to 2016. The research intends to understand how these corporate actions affect working capital management and financial performance. Using monetary comparisons and key performance indicators, a quantitative research methodology was used to analyze the pre- and post-merger periods of 200 manufacturing companies. For this study, the Purposive sampling technique is employed, taking into account the availability of data and industry representation. The study findings show how the working capital structures of industrial enterprises were significantly impacted by mergers and acquisitions. The analysis demonstrated the impact of the merger events on operational performance, liquidity, and working capital efficiency. However, the impact varied based on the industry and the total size of the enterprises. Several key aspects were found to be responsible for the changes in working capital following the merger, such as efficient resource allocation, strong leadership, cultural alignment, and clear communication. Business leaders and transparent communicators testified to more smoothly integrating procedures, which improved working capital management and financial performance. Despite the insightful knowledge obtained, there are a few constraints to the study. It did not include qualitative information from surveys or interviews with important stakeholders; instead, it contained just financial ratio indicators. Furthermore, the study only looked at manufacturing firms, perhaps ignoring other sectors with different working capital dynamics. The study creates opportunities for more in-depth research in the future that will cover a larger range of sectors and qualitative data.

Keywords: M&As, Mergers and Acquisitions, Managerial decision-making, Financial ratio analysis, Working capital structure, Financial performance

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