Determinants of Inter-Industry Variations in Mergers and Acquisitions: Empirical Evidence from Indian Manufacturing Sector

In the context of economic reforms and subsequent increase in number of Mergers and Acquisitions (M&A) in the Indian corporate sector in the 1990s, the paper attempts to identify the determinants of inter-industry variations in the incidence and extent of M&A. It finds that the decisions for M&A across industries are determined by various structural aspects of the market and other business strategies of the firms. While the possibility of M&A to take place is higher in the industries with larger market or greater selling efforts by the firms and lower minimum efficient scale of operation, the extent of these activities varies across industries directly with market size, rate of growth of sales, firms' selling efforts and technology strategies, but inversely with minimum efficient scale of operation. However, the degree of sellers' concentration does not have any significant influence either on the incidence or on the extent of M&A, implying that they are not aimed at gaining greater market power and, therefore, may not be necessarily detrimental to the consumers' interest.