Demergers in Pakistan: a comparative analysis of pre and post-financial performance

Abstract

The purpose of the article is to compare the financial results of merged and standalone Pakistani businesses. In the current study's performance evaluation, the financial statements of the businesses were used as the secondary data source. As a sample for the study, four demerger occurrences were selected. To compare the financial performance of the selected organizations three years before and after a merger, this study used two approaches. Techniques for evaluating financial performance include the DuPont Analysis, total asset turnover, return on capital used, and earnings per share, net profit margin, and return on equity. Based on the 3 years pre and post-demerger ratio analysis, we came to the end that all the selected companies have not performed very well in all taken parameters. Individually, there is a mixed situation because after demerger some organizations performed very well but others failed to perform according to expectation. The findings showed that several firms improved their financial performance following the demerger. Overall, it was seen that these traits dramatically changed from the pre-demerger to the post-demerger periods.