| Ali-baba is an online shopping platform of brand and consumer and it’s natural for it to become an advertising platform with high conversion because of the inherent properties of shopping.Therefore, from the nature of the terms, Ali-baba is both an e-commerce enterprises, but also an internet business relies on e-commerce to gather more users and traffic base.Besides, it uses the means of advertising to earn cash flow. We can see that when Ali-baba expands its electricity business, its own development and growth of e-commerce not only relies on its endogenous growth, but also the expansion of its large-scale mergers and acquisitions. And as a result, Ali-baba grows into "Ali Empire".Therefore, this article aims to study the motivation and performance of Ali-baba’s mergers and tell whether its acquisitions to expand the development of enterprises have played a good role from the perspective of the financial analysis.To analyze the performance of Ali-baba, the article will analyze not only from the financial performance, but also from the motives of the mergers. So we can see if the mergers reach the aims from the both sides. Besides, the article will analyze the specific acquisitions to better analyze the performance.In the analysis of Motives, the article mainly selects related theories of the Motives including efficiency theory, market forces theory, information and signal theory, the hypothesis of free cash flow. Combined with the theory, the article analyzes Ali-baba’s acquisition of specific cases in use of the relevant action. From the aspects of mergers and acquisitions in terms of performance, this article carries out analysis of financial indicators, from profitability, solvency, development capacity and operational capabilities of financial performances before and after the acquisitions of Ali-baba from the year of 2012 to 2014.From the view of the motives, Ali-baba expects its acquisition will do a good effect to itself in the financial point Through mergers and acquisitions, Ali-baba will be able to have a higher market valuation of enterprises and more cash flow to enhance the confidence of its investors, so as to enhance corporate’s financial performance. After Ali-baba receives more financing, it’s more convenient for Ali-baba to expand its industrial scale. At the same time, Ali-baba merges some cultural industries and mobile data industries in order to bring more traffic data for the development of core e-commerce business and enhance its core advertising business for the development of e-commerce. From this point of view, its mergers and acquisitions reduce the costs of the transaction for new businesses. The use of resources and technology from the acquisition, Ali-baba will develop its core business and expand the business scale through the integration with Ali-baba.By comparing financial indicators in the nearly three years, we can see the development of Ali-baba’s core business remained relatively stable. Ali-baba’s development and financing activities brought about larger-scale inflows than the cash outflows because of the investment activities. So its free cash flow keeps abundant But at the same time, Ali-baba’s asset’s structure has certain risks.Its gearing ratio is high and there is a higher solvency risk, which is closely related to the massive investment and acquisition. In the future, Ali-baba need to strengthen the integration of M & A business, and continue to strengthen the development of the main business, improve financial synergies merger of enterprises and enhance their profitability.Because the financial indicators can’t analyze the financial performance comprehensively, EVA is selected to indicate the financial performance. Through a large number of calculations and collation, analysts believe that the economic value added and the value of the cash have been increased after the acquisitions. And Ali-baba returns a good condition to the shareholders. Besides,we can use GMV and Monetization rate to analyze the performance of the e-commerce. |
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