A Study Of The M&A Performance Of Chinese Listed Companies

To survive in the increasingly fierce competitive environment, there are two developing routesfor an enterprise to choose from. The first route obtains gradually growth by internal capitalaccumulation, while the second route strengthens the capital gross and makes a great leap forwardby merger and acquisition. China’s economic development and globalization bring huge competitionpressure to domestic enterprises, and as a result increases the M&A activities among listedcompanies. More and more domestic enterprises prefer to enhance their core competence through M&A. The research of enterprise M&A has always been a hot and concerned topic. Our current M&A performance research and analysis are aimed at the whole M&A Market. We mainly discusswhether the M&A activties are really creating value, and who will acquire the created value. As faras we know, there are very few comparative studies of listed companies’ M&A performance bysectors. Different sectors have different industry life cycles, development strategies and mergertypes.Based on the analysis of the overall performance trends in2010M&A events, we analyse theM&A performance differences among industries. We take323Listed companies that involved inmergers and acquisitions events in China as our research objects and select13financial indicatorsthat represent the company’s operation ability、profit ability、growth ability and debt paying ability.The mergers and acquisitions performance evaluation model is built by SPSS software. On the basisof this model, we measure a company’s M&A performance during the year before the event andfour years after the event. In order to get more accurate conclusions, we classify the samples by lifecycle stage and merger type. The classification helps us figuring out the merger type that gets thebest M&A performance.The empirical results showed that:(1) The performance of limit companies in China don’t haveobvious changes after M&A event. In the year M&A happened, they behave better than the yearbefore M&A. Their performances decline in the first year and increase again in the second and thethird year after M&A. Overall, the performances of all M&A companies haven’t improvedsignificantly.(2) Inspecting from the industries’ perspective, different industries have differentM&A performances. Most M&A happened in manufacturing industry, but the Informationtechnology industry and the Warehousing industry have better performances than other industries.(3)Inspecting from the M&A types’ perspective, the growing industries receive best performancesafter they choose horizontal merger, the mature industries should choose vertical merger to getinstance performance and choose conglomerate merger to obtain sustainable development, while thedeclining industry cannot gain performance increase from M&A. Finally, we offer severalsuggestions according to the results.