Long-term post-merger operating performance of SaaS acquirers: Evidence from US and European firms

This thesis investigates the long-term post-merger operating performance of publicly listed Software-as-a-Service (SaaS) acquiring firms in the United States and Europe. Given the rapid growth of M&A activity in the SaaS industry and the mixed evidence reported in prior accounting-based studies, the study examines whether acquisitions lead to systematic improvements in operating performance relative to non-acquiring peers. Furthermore, it explores whether the method of acquisition financing—cash, stock, or mixed—affects post-acquisition performance. Acquiring firms are matched with non-acquiring peers based on pre-acquisition enterprise value and operating performance to control for industry- and economy-wide effects. The post-merger accounting-based performance of acquiring SaaS firms is then compared to that of matched non-acquiring peers in order to identify whether acquisition-induced effects on long-term performance are positive or negative. The empirical analysis employs both an accounting-based change model and a regression-based intercept model. Firm performance is evaluated using earnings- and cash flow–based measures, including return on equity, return on assets, net profit margin, EBITDA margin, revenue growth, and operating cash flow ratios. In addition, a regression framework incorporating three method-of-payment indicator variables is used to examine whether acquisition financing structure systematically affects post-merger performance among SaaS acquirers. The results provide no robust evidence of systematic improvement or deterioration in long-term operating performance for SaaS acquiring firms relative to matched non-acquiring peers. Across most measures, post-acquisition changes are economically small and statistically insignificant. While some performance differences emerge when acquisitions are partitioned by method of payment, these effects are generally weak and inconsistent. Overall, the findings support a neutral view of post-merger operating performance and suggest that anticipated synergy gains in the SaaS industry do not consistently translate into long-term accounting improvements.