Post-Merger Performance in Nordic SME M&A:The Role of Cross-Border Transactions and Cash Financing

Abstract

This thesis investigates the impact of financing structure and geographic scope on post-merger performance among small and medium-sized enterprises in the Nordic region. Despite the frequency of cross-border mergers and acquisitions, existing literature has largely focused on large, publicly traded firms, leaving a significant research gap concerning SMEs. Using a dataset of 176 Nordic SME acquisitions between 2015 and 2018, this study evaluates whether cash-financed M&As outperform those financed through equity or mixed methods, and whether cross-border transactions yield different outcomes compared to domestic deals. Performance is measured using changes in Return on Assets over a five-year post-merger period, analyzed through Ordinary Least Squares regression models with fixed effects. The results indicate that neither payment method or cross-border status significantly predicts post-merger ROA, suggesting that traditional M&A theories, such as the Pecking Order and Agency Theories, may operate differently in SME contexts. However, firm-specific factors, particularly pre-merger profitability and industry alignment, exhibit stronger influence on outcomes. Notably, cross-industry mergers were associated with improved performance, potentially reflecting strategic, opportunity-driven motives among SMEs. The study contributes empirical evidence to a relatively underexplored domain, offering insights relevant to academics, policymakers and practitioners engaged in SME internationalization and financing strategy.