An alternative approach to decompose the potential gains from mergers

Bogetoft and Wang proposed admirable production economic models to estimate and decompose the potential gains from mergers. They provided a good platform to quantify the merger efficiency and related it to relevant organisational changes ex-ante. In this paper, we develop an alternative approach to decompose the potential overall gains from mergers into to technical effect, size effect, and harmony effect. The proposed approach uses strongly efficient projections, and consistently calculates radial input-based measures for these three effects based on the pre-merger aggregated inputs. In addition, the proposed approach is of vital significance in two special cases where the aggregated projected inputs are not proportional to the pre-merger aggregated inputs and where the production sizes are very different for the original decision-making units. Finally, an application to the City Commercial Banks (CCBs) in China is provided to illustrate the usefulness and efficacy of the proposed approach. The application shows that there exist significant merger efficiency gains for these top 20 CCBs. Further, both the technical effect and harmony effect favour mergers, whereas the size effect would work against most mergers. Thus, in most cases the full-size merger with “organisational sense” is not proper

Allocating the fixed cost:an approach based on data envelopment analysis and cooperative game

Allocating the fixed cost among a set of users in a fair way is an important issue both in management and economic research. Recently, Du et al. (Eur J Oper Res 235(1): 206–214, 2014) proposed a novel approach for allocating the fixed cost based on the game cross-efficiency method by taking the game relations among users in efficiency evaluation. This paper proves that the novel approach of Du et al. (Eur J Oper Res 235(1): 206–214, 2014) is equivalent to the efficiency maximization approach of Li et al. (Omega 41(1): 55–60, 2013), and may exist multiple optimal cost allocation plans. Taking into account the game relations in the allocation process, this paper proposes a cooperative game approach, and uses the nucleolus as a solution to the proposed cooperative game. The proposed approach in this paper is illustrated with a dataset from the prior literature and a real dataset of a steel and iron enterprise in China

DEA-based Nash bargaining approach to merger target selection

Mergers and Acquisitions (M&amp;As) are important business strategies in any industry, as they allow the parties involved to achieve, for example, higher market share, profits and influence in one or more industries. In any M&amp;A activity, the key challenge for an acquirer company is to select the target company that can most improve its performance through synergy. The goal of this research is thus to help acquirer companies model and optimally solve their merger target selection problems (MTSPs) in both horizontal integration and vertical integration settings. We apply both a data envelopment analysis (DEA) based performance evaluation framework and the Nash bargaining solution concept to mathematically model an acquirer company's MTSPs under the two types of integration settings. To the best of our knowledge, the proposed new models are the first DEA-based Nash bargaining models in the literature to help acquirer companies obtain their most desired target companies. Finally, this research provides numerical examples, including real-life examples, to illustrate various aspects and implementation details of the two types of models.</p

Modelo DEA para análisis de fusiones de entidades productivas

Este documento analiza el modelo de análisis por envoltura de datos (DEA) de fusión de entidades productivas propuesto por Lozano y Adenso-Díaz (2020). El objetivo del modelo estudiado es determinar las fusionas más ventajosas de entre un conjunto de unidades, así como estimar las mejoras de eficiencia que esta fusión puede producir. El modelo también determina qué parte de la mejora de la eficiencia producida por la fusión se debe a un efecto de fusión puro y qué parte al aprendizaje que se produce al replicar comportamientos de otras DMUs (Decision Making Units) similares. Esta división entre mejora de eficiencia de fusión y aprendizaje se utilizará para determinar la idoneidad de la fusión. En este documento también se estudiarán todas las posibles restricciones que se pueden aplicar al modelo para adaptarlo a un escenario real. Para ilustrar el método y poder extraer conclusiones se ha recurrido a un caso de fusión de granjas productoras de leche. Una vez resuelto este caso con el modelo original se determinarán los resultados introduciendo distintas restricciones para observar los cambios producidos.This paper analyses the Data Envelopment Analysis (DEA) model for merging DMUs (Decision Making Units) proposed by Lozano and Adenso-Díaz (2020). The objective of this model is determinate the most advantageous mergers among a set of DMUs, as well as to estimate the efficiency improvements that these mergers can produce. The model also determines how much of the efficiency improvement is produced by pure merger effects and how much is produced by learning effect. The division between learning effect and pure merger effect will be used to determinate the suitability of the merger. This document also studies all the possible restrictions that can be applied to the model to adapt it to a realistic scenario. To illustrate the method and to be able to draw conclusions, a case of a merger of dairy farms has been used. Once this case is solved with the original model, the results will be recalculated by introducing different restrictions to observe the changes produced.Universidad de Sevilla. Grado en Ingeniería de Tecnologías Industriale