Operating Efficiency of LBO Mergers ABSTRACT Serious questions have been rai

What effect does merger accomplished through an LBO structure have on the operating efficiency (profitability) of the surviving firm in comparison with the premerger operating efficiency of the firms involved in the merger?

The focus of this research study was on the impact on operating efficiency of LBO mergers. It is recognized that other factors also affect operating efficiency, and, while an effort was made to eliminate the effects of such other factors, the validity of the findings of this study may be compromised to some extent by this limitation. Based upon the research question investigated in this study, a research hypothesis was formulated, and was tested in the conduct of the study. This hypothesis was stated as follows: It is hypothesized that merger accomplished through an LBO structure will cause the operating efficiency (profitability) of the surviving firm to decline from the premerger

profitability levels of the separate firms involved in the merger.

The time frame for the data collection for this studywas 19831987 inclusive. LBO mergers occurring in the 19841985 time frame were included in the popul

. . .
e too low to warrant support of the null hypothesis. In the testing of the hypothesis in this study, a finding that the probability of the random occurrence of the data is less that fivepercent caused the null hypothesis to be accepted, by inference, which means that, in turn, the research hypothesis would be rejected. Conversely, a finding that the probability of the random occurrence of the data is greater than fivepercent would cause the null hypothesis to be rejected, by inference, which means that, in turn, the research hypothesis would be accepted. Rejection of the null hypothesis, and, in turn, acceptance of the research hypothesis, was presumed to indicate that LBO merger activity did impact operating efficiency at the firm level, by causing a change in profitability. Conversely, acceptance of the null hypothesis, and, in turn, rejection of the research hypothesis, was presumed to indicate that LBO merger activity did not impact operating efficiency at the firm level, by causing a change in profitability. Chapter 4 FINDINGS AND RESULTS The findings and results of the research performed for this study are reported in this chapter. The research question investigated, and the research hypo
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Approximate Word count = 4524
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