The aim of this paper is to study the financial performance between pre and post
acquisition of Indonesia finance company industry over the period of 2002-2011. The acquisition
can be categorized into 3 categories based on the acquirer. The acquirer can be categorized into
banking related acquirer, automotive related acquirer, and unrelated or independent acquirer.
The banking industry which provides majority of funding, has made finance companies as part
of their integration business model. The automotive manufacturer and dealer which provides
the products of financing, has the similar strategy. The acquisition of finance companies has
reached more than 30 transactions from 2002 till 2012. We analyzed 7 micro key financial
ratios (profitability, efficiency, growth, firm size, liquidity, solvability and risk). We use the
non parametric Wilcoxonand the parametric Panel Data. The empirical results show that finance
companies have better efficiency in operation, lower leverage, bigger size, and better growth in
asset after the acquisition. However, the profit has decreased post the acquisition. There is no
significant effect in liquidity ratio and provisioning ratio. All three categories have showed
improved efficiency and firm size. Only forward integration has improved the profitability
through an increase in the portfolio yield. In contrary, the unrelated acquisition has reduced
the growth ability after the acquisition. |