Analysis On Performance Of Acquiring Companies And Influencing Factors Of Performance In Horizontal M&A

How to expand the scale of the enterprises has always been a concentration.With the further development of the capital market in China,M&A has provided a significant way to realize quick expansion for enterprises.There has been a lot of research on the influencing factors of the performance of M&A which is relatively general.Influencing factors may have different characteristics in their degree or orientation in different kinds of M&A.In recent years,events of horizontal M&A have accounted for almost half of all the M&A events in China in both quantity and dealing amount.Horizontal M&A could help to improve industry concentration and level of industry profits,achieve economies of scale for acquiring companies by rapid expansion and provide exit mechanisms for enterprises.Because of the significant role and effect of horizontal M&A,it is the focus of this paper.After the study of relative papers,M&Aperformance and its influencing factors are studied here from the perspective of acquiring companies for helpful suggestions for horizontal M&A in the future.321 samples of horizontal M&A are selected according to several criteria from the M&A events in the years from 2011 to 2014 in which listed companies are buyers.After the deep investigation of the route to influence the performance of the buyers in horizontal M&A,the rate of return on net assets which is adjusted by the industry average is regarded as the preferred way to measure the performance of the acquiring companies.One-sample t-test,paired-samples t-test and descriptive analysis are adopted to analyze performance of acquiring companies before and after M&A.In the acquisition year and the next year,the performance of the buyers both exceed the performance before M&A.Two years after M&A,there is not a significant change in performance compared to the year before acquisition.These reveal that horizontal M&A can improve performnce of acquiring companies to some degree.Factors in the levels of the buyers,M&A transactions and the industries are considered in the analysis of influencing factors on the performance,of M&A.Specifically,the scale of the buyers,ownership concentration,enterprise property,related transactions,transaction price and the growth rate of industries are studied.Healy model is adopted to carry on regression analysis.The main conclusions by empirical analysis of this paper are as follows:Firstly,the scale of the acquiring companies and the growth rate of the buyers' industries both have positive effect on the performance of the buyers,transaction price has a negative effect and private enterprises have better performance than state-owned companies.Secondly,ownership concentration has positive but not very significant effect and related transaction has almost no effect on the performance of M&A.Several suggestions are made based on these conclusions.