A Study On The Motive And Performance Of Mergers And Acquisitions By China’s GEM Listed Companies

The growth enterprise market emerged in the1970s of the United States. With the economic and social progress, the GEM has also experienced a process of continuous innovation, gradually developed into a financing platform for medium-sized companies, especially high growth technology companies. Gem in China is opened in2009, it has led many high growth and high-tech corporations initial public offering here. Due to the emerging industry support and the good prospects for national policy development, most GEM investors expect GEM companies have the ability to have higher growth. On the other hand, the Shenzhen Stock Exchange issued the "Shenzhen stock exchange GEM Listing Rules", which propose a strict regulation on GEM companies. In this background, the listed companies in order to maintain or improve market position and avoid being eliminated, are actively seeking effective growth path. Among them, a kind of extensive growth path, mergers and acquisitions, which can help the listed company to achieve rapid expansion are quite popular, and cause a wave of mergers and acquisitions. Based on this, this article takes our country’s mergers and acquisitions wave of GEM as the background, and combined the characteristics of the GEM, study the M&A motivation and performance of the GEM listed companies, in order to accumulate experience for future research, and can provide advice for GEM’s mergers and acquisition practice.This paper is divided into five chapters, the research ideas, contents and main viewpoints of each chapter are as follows:The first chapter is introduction. Firstly, this chapter presents the study background. Secondly, demonstrate the necessity of this study from theoretical and practical point of view. Lastly, the chapter introduces the research contents and the main research methods.The Chapter2is about theoretical foundation and literature review. Firstly, according to the two aspects of meaning and classification, introduce the theory of mergers and acquisitions, and then define the related concepts used in this paper. Next, this chapter systematically introduce the academic motives and performance of mergers and acquisitions, such as synergistic effect theory, agency theory and hubris hypothesis etc. This chapter also introduces the Chinese and foreign scholars achievements about the M&A performance study. Finally, evaluate the existing literature achievements, and make the necessary groundwork for the study of this paper.The third chapter is about the behavior of the growth enterprise market corporations’mergers and acquisitions. In this chapter, research the M&A motive and performance characteristics of China growth enterprise market. In the aspect of acquisition motivation, this paper analyzes the M&A cause of the growth pressure and the fund raised, with the combination of the characteristics of GEM plate, listed companies’industry and the company features. The two reasons are the inheritance and development of the existing M&A theory. As to M&A performance, mainly adopts the research method of accounting index, and according to calculate and analyze the growth enterprise market of listing corporations’Tobin Q value, the rate of return on net assets and debt to asset ratio, find that on the whole, mergers and acquisitions failed to achieve the companies’ business performance improvement. Not only that, the expansive mergers also increased the financial risk of the company.The fourth chapter is the analysis of Blue Focus merger cases. In this chapter, select one of the companies listed on GEM, Blue Focus to analyze the company’s merger and acquisition activities. First of all, in the study of the motivation of M&A, use the conclusion in the third chapter as basis, investigate if extra fund raised and the growth pressure is the main reason resulting in M&A. Secondly, to test the performance of M&A in Blue Focus, choose the proper financial index, detailed analyze the change of solvency, profitability and operation ability before and after M&A in all aspects.The fifth chapter is inspiration and suggestion. By studying the above sections of this paper, draw some inspiration and suggestions on GEM listed companies’merger behavior. GEM listed companies should focus on core competencies to carry out mergers and acquisitions, post-merger integration and should achieve high growth and real sustainable development. For corporate mergers and acquisitions, many Chinese and foreign scholars have done a lot of research, but there is a few scholars started the research from the view of a specific stock market. Especially for China’s GEM, the related research is even more less. But this paper bases on the GEM market in China, excavated specific characteristics of the plate, and then combined with the actual case, using theoretical analysis and empirical analysis methods to study the performance of mergers and acquisitions of GEM. Finally, draw some conclusion which matches China’s GEM, and the conclusions are also the main contribution of this paper. Of course, this paper also has some shortcomings. For example, the M&A case is a single case, so the representation is not enough; only use financial index but not use the event study method to study the performance of M&A; all resource data are from the external information.