The Research On The Impact Of Mergers And Acquisitions On Corporate Value

Since the late 19th century,the western countries have experienced five times bigger merger and acquisition(M&A)waves.The economic development promotes enterprise’s merger and acquisition activities,which present several new characteristics,such as propagative transaction scale,increasing transaction amount,innovative trading tools and various trading forms.In China,the rapid development of the retail and wholesale industry leads to the increasingly fierce competition in the home appliance retail industry.And the race between SUNING and GOME play a significant role in the market chains of household electrical appliances at present.Since the merger and acquisition activity is always complex and mysterious,people whether concerned on the theory or practice have been interested in the reasons why enterprises do M&A.The most natural answer is that the real motivation behind the complex M&A activity is to ascend the enterprise value.Macroscopically speaking,merger and acquisition is a configuration of social resources by upgrading industrial structure;microcosmically,the business management strategy and the company trading strategy are the two mechanisms to establish a modern enterprise,and M&A activities bring changes to the business management strategy.This paper includes the introduction,main body,conclusion,and prospect,and is divided into five chapters as follows.Chapter 1 is Introduction.We briefly reviews the background of this paper,and introduces the purpose,significance,main content,method,weaknesses,and contribution of this study.Chapter 2 is Survey of Related Literatures.In this chapter,we introduces the meaning and main forms of enterprise value through a review of previous research,and describes the current research on M&A.Afterwards,a brief framework of how M&A affects enterprise value.Chapter 3 is M&A and Theory of Enterprise.Modern estimation models and theories of enterprise value are introduced,and the reason why the model is adopted in this paper.Afterwards,the effects of M&A on enterprise value are analyzed based on economical theories.Chapter 4 is Analysis of SUNING’s M&A case.This is the core of this paper.First,we introduce the background of SUNING’s M&A,the conditions of each companies,the change of the ownership structure,and the value of M&A,providing a foundation for the later statement analysis of SUNING’s financial affaires..Then,we explore the reasons why SUNING merge LAOX and CITICALL and the values it will make.Afterwards,the intergration method that SUNING merge LAOX and CITICALL and the effects on these three companies are introduced.Finally,the writer tries to analyze the changes of SUNING’s and LAOX’s assets and return on market during 08-10,and find out whether the value of these two companies increase after M&A.In addition,The writer compares the financial data of SUNING and GOME to reveal the information behind various indices.An analysis on the EVA of them shows the landscape and longitudinal changes of their enterprise values.Since SUNING and GOME are leaders in the domestic retail industry,it promises an intuitional illustration of whether M&A affects enterprise value.Chapter 5 is Research Conclusions and Prospects.In this chapter,the conclusion about whether M&A create value is drawn based on the analysis in previous chapters.In addition,based on the conclusion,we put forward some personal prospects for SUNING,and hope the other domestic companies can be inspired by SUNING during their M&A.The contributions of this paper are as follows:explains and adjusts the EVA calculation of LAOX and GOME according to the international standards of the statements;analyzes the meaning of the enterprise real value by combining the traditional financial analysis,profitability,and EVA,which is possible to inspire domestic enterprises during transnational M&A activities.Nevertheless,this paper is still limited in some respects.For example,there is no theory and model to calculate the values obtained through M&A,and it is not enough to estimate the values created by M&A using the related evaluation model of enterprise value,we can only fuzzily define for interval of enterprise value created by M&A.In addition,with the domestic,international,Japan accounting criteria involved,it is impossible to avoid omissions,biases and errors in the data.As a result,the comparative analysis of the financial data can only show the value intervals of the three companies,but may not accurately reflect the companies’operating condition.Finally,since I have not engaged in an enterprise management job,all the advices can be only treated as advices.Since each industry has its own characters,how to make M&A bring more value to enterprise still worth more exploration and research.