Enterprise Life Cycle And The Choice Of M&A Type

M &A is very important for the long-term development of a company, in this society, the frequent occurrence of corporate mergers and acquisitions, aroused the enthusiasm of domestic and foreign scholars. The performance after M&A and its reasons for the changes has become a hot research topic. The study found different types of M&A will bring different Performance Changes. Which is the most suitable one? Which mergers and acquisitions may reduce the performance? There is no unified opinion at present. Some scholars try to use industry life cycle to explain the reason, but from the point of view of research scholars, different scholars hold different views, visible industry theory is not completely suitable for the analysis of enterprise level issues. It’s well known that an industry is formed by many enterprises, in growing industry, some enterprises have already flourishing, the mature industry also has the enterprise which just beginning. This begs the question: Whether the corporate life cycle theory can be used to study the choices of the types of M&A?This thesis uses the corporate life cycle to discuss that in different enterprise life stages which types of M&A are suitable for them. The M&A events of 283 listed companies in 2011 are selected as the sample. Firstly divides life cycle stages of the enterprises, and then uses factor analysis to build M&A performance score function. The performance score of 5 years before and after M&A is be calculated by this function. In order to compare that the relationship between different life stages and the types of M&A. Empirical analysis shows that in the growth stage of enterprise, the performance of horizontal M&A is better than other types of M&A; enterprise in the mature stage, vertical and mixed M&A are more suitable for the improvement of enterprise performance; in the recession phase of the enterprise, the performance of the mixed M&A is better than other types of M&A. The hypothesis of this thesis is proved.Last, this thesis proposes policy recommendations from the Government and the enterprise. From the point of view of the government, the capital market of our country needs to be further improved, at the same time to establish and perfect the laws and regulations. And The government needs to reduce the interference of enterprises, let M&A can response to market objective orientation. From the enterprise’s own point of view, it should consider the issue of mergers and acquisitions from their own strategic development, and perfect plan ahead and post integration.