The impact of the financial crisis of 2008 on the domestic and cross-border M&A of Russian companies

Abstract

The global financial crisis of 2008 had a negative impact on the world economy, resulting in an economic recession. Companies that pursued an inorganic growth strategy had to re-consider their strategies due to the lack of both internal and external sources of financing growth. The purpose of the research was to study the relation between several company-level characteristics and the probability of pursuing an acquisition deal, and to see whether this relation was different during the crisis. The research was conducted by applying a regression model. In the end the findings on differences in the relation between company-level characteristics and the decision to pursue an acquisition are presented. It was investigated that the firm’s size is a predictor of pursuing an acquisition in both periods studied, while high leverage was predicting the probability of pursuing an acquisition deal only in the pre-crisis period. The research results are summarized into implications and recommendations for companies pursuing an aggressive growth strategy who are in the conditions of the macroeconomic financial crisis.