The Case Study To The Serial M&As Performance Of G Company

With the constant improvement of China’s capital markets, M&A activity is increasingly becoming an important way for China’s companies to gain a rapid development. Data shows that in 2012, the number of global M&A market transactions amounted to $ 2.8 trillion, China ranked second and had the world’s highest growth rate. In 2013, China’s M&A market transaction amounted $ 332.85 billion, and the number of M&A cases amounted to 4496. China’s M&A transactions have become increasingly active, mergers and acquisitions of companies are continuously increasing. While more and more companies carry out M&A activities in order to expand their size and enhance their competitiveness, it is noted that most of them gain lower and lower efficiency, and this phenomenon worth further study.Completing the deal does not mean that the M&A activity is successful. If M&A activity ultimately increases shareholder’s wealth and business efficiency, we will call that a successful M&A activity. Successful M&As need the help of management source and management strategy. If M&A activity lack of the cooperation of business management activities, the business performance cannot be improved, and the M&A activity also cannot be successful.G Company is a home appliance retailer, it becomes the biggest company in the industry because of the series of M&A activities it carried out since 2004. While its operating income and net profit increase significantly, the company’s operating efficiency becomes lower than before. Therefore, the purpose of this paper is to find out why the company’s efficiency gradually decline after a series of M&As. Firstly, I use two indicators-- ROE and stock price to measure the comprehensive performance of G Company. And then I use DuPont analysis and alternative methods to carry out a furthermore analysis and I finally identify the cause of Enterprise Performance declining —— the operating costs of businesses growing faster than its revenue. This result reflects that G Company’s scale expands rapidly thanks to the implement of series of M&As, but the growth of its management resources and management capacity is relatively slow, resulting in a decline in overall business performance. Then, I further studied the information which reflects on G Company’s management information and capacity and found its weakness —— the malfunction of procurement system, the mistake of brand integration strategy, weak logistics facilities, mistake of human resources management. Finally, I summarized the M&A case study of G Company and put forward some recommendations for the other companies in the industry.