A Study Of M&A Performance

Merger and acquisition (M&A) is one of the two ways of business growth, compared to development through internal accumulation, M&A is more advantageous in terms of both economic cost and time cost. Since the19th century, large-scale transaction of M&A has been carried out worldwide and the total scale of global M&A transactions reached a record high of＄4.2trillion in2007. With the development of China’s economy and increase of banking industry’s comprehensive strength, overseas M&A of China’s banking industry are now possible. Meanwhile, after joining the WTO, China’s banking industry would realize full liberalization to foreign capital since the end of2006, which would lead to an increasing number of foreign banks entering the Chinese market. Therefore, China’s banking industry needs to expand its business and enhance its capability through overseas M&A urgently to better cope with increasing competition from foreign banks.In theory, M&A will help enterprises realize value addition through synergies, diversification and increased market force, etc. However, the real-world experience has proved that many M&A transactions do not increase enterprise value. Combined theoretical analysis and case analysis methods, this paper studies the performance of M&A, which is very meaningful when M&A is widely used today.This paper first gives definition and classification of M&A, and reviews the history and characteristics of general enterprise M&A and M&A of banking industry separately; then discusses theories of value creation of M&A for enterprises as well as that of overseas M&A for banks; analyzing factors that impact M&A performance and bank overseas M&A performance on the basis of value creation theories; selecting three cases of overseas M&A of domestic banks to assess the financial value and strategic value obtained by overseas M&A of banks, and reached conclusion that China’s domestic bank overseas M&A has profound strategic and practical significance, and analyzed HSBC’s successful experience in overseas M&A to inspire China’s banking industry; finally, giving the strategic recommendations to improve the performance of bank overseas M&A from the perspective of domestic banks and the government respectively.