The Determinants of M&A: Acquirer vs Target Firms in Indonesia

This study aims to investigate the factors influencing the processes
of merger and acquisition (M&A) in Indonesia. In this research,
there were 53 companies acting as targets and 109 companies as
acquirers. The dependent variable used for this study is the
probability of companies, both targets and acquirers, engaging in
the M&A process. The independent variables including size,
profitability, leverage, revenue, capital, cash holdings, cash flow,
tangible assets, and intangible assets. This research was conducted
within the time span from 2015 to 2023 employing binary logistic
regression. The analytical results reveal that certain independent
variables significantly influence the likelihood of acquirer
companies to undertake merger and acquisition processes.
Specifically, size, leverage, capital, and cash holdings have a
significant impact on the likelihood of acquirer companies to
engage in the merger and acquisition process. Conversely,
profitability, revenue, cash flow, tangible assets, and intangible
assets do not significantly affect the likelihood of acquirer
companies participating in the M&A process. This study provides
valuable insights into the factors that influence M&A activities. It
is anticipated that the findings of this research will prove beneficial
for subsequent studies pertaining to the trends in M&A activities
in Indonesia in the foreseeable future.