engleski

Predicting Takeover Targets– Case of Croatian Insurance Companies (1998-2010)

Globalization and fierce competition have forced many business entities to look for alternative ways of improving their competitiveness. One of such ways is particularly interesting and it refers to mergers and acquisitions of companies. M&A activities are conducted within different industries as well as in an insurance industry. This paper investigates the characteristics of target companies in the Croatian insurance market. The data used for these analyses refer to the period from 1998 to 2010. Starting from the standpoint that not all insurance companies are equally attractive for M&A, logistic regression analysis was conducted with the aim of exploring characteristics of target insurance companies and finding out the motives for acquiring a particular insurance company. Such an analysis brings an important finding according to which insurance companies are characterized by distinctive characteristics which make them potential targets. The findings show that out of eighteen independent variables included in the model, three of them were statistically significant (leverage, size measured by gross written premium and size measured by total assets) in predicting whether a certain company is about to become a target company. The likelihood of being acquired is significantly and positively related to leverage and size measured by gross written premium, while it is negatively related to size measured by total assets. The results of the analysis show that M&A are to be driven for the most part by economically viable objectives.

M&A ; takeover targets ; logistic regression

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