e effects of the LBO merger.
The research sample included both merged and non merged firms, to permit a comparative assessment of the effects of mergers. In this way, the effects of general economic changes were not permitted to skew the results of the measurement of the effects of LBO mergers on operatng efficiency.
A total of 10 LBO mergers, each with a total value of $200 million or more, were selected for the research sample. A list of the LBO mergers completed during the 1984 1985 time period was prepared. Employing random number tables, the 10 merger sample was selected. Each of these mergers involved two inde pendent corporate entities. Thus, 20 firms in the same industries, but which were not involved in mergers, were alsoselected. An effort was made to select firms for the
non merged group of approximately the same size (annual sales) as those firms included in the merged group.
The research hypothesis was tested through the application of analysis of variance procedures to the data. Statistical significance was tested at the p<.05 level of probability.
The results of the analysis of variance indicated that the effects of LBO merger activity alone on profitability were not statistically significant at p<.05. Thus, the results indi cated that LBO merger activity did not impact operating effic iency at the firm level, by causing a change in profitability.
The findings of the research performed for this study were different from those anticipated at the beginning of the study. It had been anticipated that the research would disclose that LBO merger activity had a detrimental impact on the post merger profitability of firms surviving LBO mergers. Based solely on the findings of the research performed for this study, it must be concluded that LBO merger activity does not have an adverse impact on the post merger profitability of firms surviving an LBO merger.
Although the findings of this study ...