Do large South African acquisitions result in post-acquisition improvements in cash flow returns?

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dc.contributor.advisorCorreia, Carlosen_ZA
dc.contributor.authorBrink, Jacoen_ZA
dc.date.accessioned2016-07-28T12:24:20Z
dc.date.available2016-07-28T12:24:20Z
dc.date.issued2016en_ZA
dc.description.abstractThe purpose of this study is to evaluate whether South African acquisitions result in success, with success measured as post-acquisition improvements in cash flow returns. The reason for this approach is the view that a firm's intrinsic value is coupled to its long-term cash-generating ability. Post-acquisition change in cash flow returns for large acquisitions made by JSE-listed firms over the period 1995 - 2009 were analysed. Cash flow returns were measured as free cash flow to the firm over capital employed. This measurement of cash flow return is neutral to the firm's financing decision and capital structure, thus facilitating a comparison between different firms. Changes in annual cash flow returns were measured over the period covering five years preceding and five years following completion of acquisitions. The cash flow returns of the acquiring firms were compared to benchmark returns of firms in the same sector which did not undertake major acquisitions. The study found in 22 of 24 tests that the benchmarked post-acquisition cash flow returns and EBITDA returns were not significantly different in relation to the benchmarked pre-acquisition returns. However, in two tests which adjusted for operating leases and used total returns over the pre-acquisition and post-acquisition periods, it was found that the difference in returns were significant. The sample of eleven firms is relatively small and any inferences about South African acquisitions in general should therefore be approached with care. The divergence in results between the individual firms within the sample, as well as the outlined sensitivities of observed results lend further support for this cautionary approach. Despite the limited number of acquisitions that occurred over the period, this study should contribute towards a better understanding of the overall value proposition of large South African acquisitions, as well as provide impetus for related future research.en_ZA
dc.identifier.apacitationBrink, J. (2016). <i>Do large South African acquisitions result in post-acquisition improvements in cash flow returns?</i>. (Thesis). University of Cape Town ,Faculty of Commerce ,Department of Finance and Tax. Retrieved from http://hdl.handle.net/11427/20978en_ZA
dc.identifier.chicagocitationBrink, Jaco. <i>"Do large South African acquisitions result in post-acquisition improvements in cash flow returns?."</i> Thesis., University of Cape Town ,Faculty of Commerce ,Department of Finance and Tax, 2016. http://hdl.handle.net/11427/20978en_ZA
dc.identifier.citationBrink, J. 2016. Do large South African acquisitions result in post-acquisition improvements in cash flow returns?. University of Cape Town.en_ZA
dc.identifier.ris TY - Thesis / Dissertation AU - Brink, Jaco AB - The purpose of this study is to evaluate whether South African acquisitions result in success, with success measured as post-acquisition improvements in cash flow returns. The reason for this approach is the view that a firm's intrinsic value is coupled to its long-term cash-generating ability. Post-acquisition change in cash flow returns for large acquisitions made by JSE-listed firms over the period 1995 - 2009 were analysed. Cash flow returns were measured as free cash flow to the firm over capital employed. This measurement of cash flow return is neutral to the firm's financing decision and capital structure, thus facilitating a comparison between different firms. Changes in annual cash flow returns were measured over the period covering five years preceding and five years following completion of acquisitions. The cash flow returns of the acquiring firms were compared to benchmark returns of firms in the same sector which did not undertake major acquisitions. The study found in 22 of 24 tests that the benchmarked post-acquisition cash flow returns and EBITDA returns were not significantly different in relation to the benchmarked pre-acquisition returns. However, in two tests which adjusted for operating leases and used total returns over the pre-acquisition and post-acquisition periods, it was found that the difference in returns were significant. The sample of eleven firms is relatively small and any inferences about South African acquisitions in general should therefore be approached with care. The divergence in results between the individual firms within the sample, as well as the outlined sensitivities of observed results lend further support for this cautionary approach. Despite the limited number of acquisitions that occurred over the period, this study should contribute towards a better understanding of the overall value proposition of large South African acquisitions, as well as provide impetus for related future research. DA - 2016 DB - OpenUCT DP - University of Cape Town LK - https://open.uct.ac.za PB - University of Cape Town PY - 2016 T1 - Do large South African acquisitions result in post-acquisition improvements in cash flow returns? TI - Do large South African acquisitions result in post-acquisition improvements in cash flow returns? UR - http://hdl.handle.net/11427/20978 ER - en_ZA
dc.identifier.urihttp://hdl.handle.net/11427/20978
dc.identifier.vancouvercitationBrink J. Do large South African acquisitions result in post-acquisition improvements in cash flow returns?. [Thesis]. University of Cape Town ,Faculty of Commerce ,Department of Finance and Tax, 2016 [cited yyyy month dd]. Available from: http://hdl.handle.net/11427/20978en_ZA
dc.language.isoengen_ZA
dc.publisher.departmentDepartment of Finance and Taxen_ZA
dc.publisher.facultyFaculty of Commerceen_ZA
dc.publisher.institutionUniversity of Cape Town
dc.subject.otherFinancial Managementen_ZA
dc.titleDo large South African acquisitions result in post-acquisition improvements in cash flow returns?en_ZA
dc.typeMaster Thesis
dc.type.qualificationlevelMasters
dc.type.qualificationnameMComen_ZA
uct.type.filetypeText
uct.type.filetypeImage
uct.type.publicationResearchen_ZA
uct.type.resourceThesisen_ZA
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