Mergers and acquisitions and firm growth Investigating restaurant firms

Merger and acquisition (M&A) has been viewed as an efficient strategy for firm growth because M&As allow firms to quickly achieve their ideal size However whether consistent growth can be maintained after an M&A is questionable because post-M&A integration is a difficult process In order to identify whether M&A is really an effective tool for producing consistent growth in restaurant firms this study examined post-M&A firm growth in comparison to non-M&A firm growth Using financial data from 1980 to 2007 this study analyzed the sales growth of restaurant firms up to five years after an M&A This study found that post-M&A growth patterns varied across firm sizes and time periods (from one to five years after an M&A) This study also revealed that both small and large acquirers experienced positive sales growth in the year following M&A However this positive effect completely disappeared during or after the third year post-M&A M&A firms showed the same growth patterns as non-M&A firms three to five years after an M&A This study provides useful post-M&A growth information regarding restaurant firms which can be practically useful for firms considering M&A (C) 2010 Elsevier Ltd All rights reserved