Valuation Process and Performance of Combined Ethiopian Companies: (Experience from Sur Construction plc. and Ethio-Rental plc)

Abstract

The study circulates around the key issues in merger valuation and financial performance of the merged company before and after union . The objective is to analyze the valuation process and  evaluate the performance of merged company before and after merger. The data used in the study was obtained from the audited financial statements of the company’s and through interview with the executives. The performance 5 years before and after combined   are investigated using financial statement analysis. In order to substantiate the result t- test was used for hypothesis testing. The study finding indicates that the major merger motive is enhancing profitability. It is also found that the merger process is simply pooling the audited financial statements of companies going for merger. The study analysis made both by financial statements analysis and the hypothesis testing made shows that performance of firms after combined has declined as compared to the performance of firms before combined.