MERGERS AND ACQUISITIONS STRATEGY ON PERFORMANCE OF OIL MARKETING COMPANIES IN NAIROBI COUNTY

Abstract

Mergers and Acquisitions as growth strategies have in the past been used in several industries across the business world. Growth strategies are intended to derive great efficiency for company operations. This study investigates the effects of mergers and acquisitions (M&As) on the performance of oil marketing companies (OMCs) in Nairobi County, Kenya. Specifically the study sought to determine the effect of liquidity on the performance of oil marketing companies in Nairobi County, establish the influence of financial leverage on the performance of oil marketing companies in Nairobi County, determine the influence of capital adequacy on the performance of oil marketing companies in Nairobi County, analyze the influence of customer satisfaction on the performance of oil marketing companies in Nairobi County, and establish the size of the firm and its effect on the performance of oil marketing companies in Nairobi County. Anchored in synergy, growth, and market power theories, the study employed a descriptive research design and census sampling to analyze data from 37 senior managers of Nairobi-based OMCs. Both primary (questionnaires) and secondary (annual financial statements) data were collected and analyzed using SPSS 21.0 using correlations, descriptive statistics and regression analysis. Findings reveal that all five independent variables significantly impact OMC performance. While liquidity and financial leverage have a moderate inverse relationship with performance, capital adequacy, customer satisfaction, and firm size demonstrate a positive linear correlation. The study recommends that OMCs pursue M&As to achieve sustained growth and profitability. By strategically managing liquidity, financial leverage, capital base, customer satisfaction, and operational capacity, OMCs can enhance their long-term success. Industry regulators are also encouraged to facilitate a conducive environment for M&As.