The Study Of The Auto Industry M&A Performance Based On Industry Life Cycle

The development of automobile industry embodies the comprehensive nationalstrength of a country, since the beginning of21-Century, the development of automobileindustry in our country has been a qualitative leap; it is more and more Influencer on thewhole national economy. With the national auto industry policy introduced, more autoenterprises choice M&A to improve the economic benefits and Industrialcompetitiveness. Facing the increasingly fierce market competition, the enterprises takecorresponding development strategy in the different stages of industry life cycle, whichto meet the needs of market economy and seize market share. In the process ofindustrial development, M&A as strategy constituent part of enterprise growth, if theenterprises in the different stages of industry life cycle want to achieve the best effectsof mergers and acquisitions, it should choice different form of M&A.In the paper, this research is supported by industry life cycle theory and based onthe correlation analysis of ‘Industry Life Cycle and M&A Type’. The best M&Astrategy of the enterprises in the growing period and early mature period is consideredas horizontal merger, and it in the late mature stage is considered as vertical merger. Inthe first, the auto industry’s laws of development of the main developed countries areanalyzed by industry life cycle theory, and the currently growth stage of industry lifecycle in China auto industry is identified. In the second, according to correlationanalysis of industry life cycle and M&A type, which is the best M&A strategy of theenterprises in the growing period and early mature period is considered as horizontalmerger, the paper selects2007-2010automobile industry listed company M&A eventsas the overall study sample, classify the merger types of all study samples and make theempirical analysis to the financial performance of the sample companies before M&A one year, this year and next year. The empirical result shows that, the performance ofhorizontal merger is better than horizontal merger. In the last, basing on the currentsituation of M&A situation and the development of the auto industry, and combiningwith the China promulgated policy of the automobile industry, the paper puts forwardtargeted countermeasures to improve the M&A performance of auto industry.