Research On M&A Performance Of Chinese Companies

With the rapid development of China’s economy,more and more Chinese enterprises attempt to acquire overseas well-known firms to further expand overseas markets and have access to strategic resources.Among them,the Lenovo Group’s acquisition of Motorola Mobility draws much attention.However,systematically study on the issue whether this acquisition can replicate the success of its former acquisition of IBM’s PC business has not yet been conducted.This paper firstly reviews the case of the Lenovo Group’s acquisition of Motorola Mobility.Secondly,financial indicators and non-financial indicators are adopted to analyze the motives and effects of this M&A,aiming to have a comprehensive evaluation.Thirdly,countermeasures and suggestions will be given based on the evaluation results and the existing problems.The analysis of this M&A suggests the following aspects of Lenovo Group’s purpose.Since expansion and competition of the mobile communication industry has increased,Lenovo intents to build a brand-new mainstay business through the acquisition.By doing so,Lenovo is able to obtain the advanced technology,human resources of the acquired party and further capture the global market.What’s more,Lenovo can achieve a leading position in the industry as well as financial synergies.The assessment of the M&A effect based on the motivation shows that Lenovo basically achieves its motivation of this purchase.The M & A performance evaluation based on the results of operating performance shows that the M & A activity does not significantly enhance Lenovo Group’s profitability,asset management capabilities.Instead,the solvency of Lenovo Group,to some extent,has been affected.From the perspective of growth capacity,Lenovo Group demonstrates a rapid growth in business scale but its growth rate of net profit has declined sharply after acquiring Motorola Mobility.Overall,Lenovo’s acquisition of Motorola Mobility has achieved an initial success.However,it is still facing a decreased ability for asset management,debt paying and other problems due to the inadequacy of financing channels,the underestimation of the difficulty in integrating with Motorola,as well as the wrong operating strategy.To enhance the integration capacity of the firm so as to support its long-term development,this thesis attempts to provide solutions in three perspectives,namely,exploiting new financing channels,enhancing operation and management competence,developing scientific strategic plans.