A Study On M&A Performance In Major Asset Restructuring On The ChiNext

M&A is not only an important way of resource allocation,but also an important way for the growth of enterprises.The western mature markets,represented by the United States,have experienced five times of waves of merger and acquisition activities.After the financial crisis in 2008,the mergers and acquisitions activities in the PRC demonstrated more and more frequent momentum,along with recovery of the economic and stock market and the enhancement of the regulatory regulations.In view of the different national conditions and the different enterprises' situation,the western M&A research and theory may not be generally applicable to the M&A behaviors in the capital market with the backdrop of special system in the PRC.Taking full account of the unique features of the major asset restructuring for the listed companies on the ChiNext,I believe that it is valuable for us to conduct an in-depth study on such field.This paper intends to examine the financial effect of M&A as an important development path of the enterprise by studying the performance changes caused by M&A from the perspective of the listed companies on the ChiNext(as acquirers in the M&A).The object of the study is:for the listed companies on the ChiNext,with significant impact on the major asset restructuring in the most important form-the listed companies acquired the non-listed assets by way of equity behavior.This paper examines the financial performance changes before and after the acquisition from the listed company's overall operating efficiency changes and changes in the shareholders value of listed companies,respectively,adopting the financial index research method.Based on the market and institutional characteristics of ChiNext,this paper studies the M&A performance of 28 major listed companies in 2014,and draws a basic conclusion,and further analyzes the potential impacts on the relevant enterprises,shareholders and other stakeholders as well as the market regulation resulting from the behavior of mergers and acquisitions and finally put forward a number of pertinence recommendations.My analysis is conducted as follows in the specific process of writing:First of all,we evaluate the impact of merger and acquisition activities on the overall operating efficiency of the listed companies through establishing financial evaluation system and adopting factor analysis method,which concluded that the operating efficiency of the entities would not be improved or declined substantially by the performance of mergers and acquisitions.The major reasons are as follows:Firstly,the major asset restructuring are subject to the strict approval of the CSRC and other procedures,which the assets to be acquired generally have relatively high quality;Secondly,with the introduction of a bet on the nature of the performance undertaking mechanism,accordingly the assets to be acquired will endeavor to fulfill the performance undertaking during the performance undertaking Period;Thirdly,in respect of the nature of the merger,the enterprises become larger through the M&A activities,the operational efficiency may be improved due to the synergy effect,and the financial indicators may also be affected due to the follow-up integration difficulties and the recognition of the significant goodwill in the accounting field,Moreover,the ChiNext listed companies have their own characteristics of high growth with the pre-merger indicators being relatively higher.Secondly,the author analyzes the impact of mergers and acquisitions on the shareholders of listed companies through the statistical analysis of the financial indicators related to the valuation of the secondary market and the use of financial indicators comparison method,which concluded that the merger significantly increased the earnings per share,and the financial performance has been greatly improved,which brings great wealth valuation to the shareholders.Analysis of the main factors that led to the conclusion:Firstly,mergers and acquisitions enhanced the proportion of the total market value of listed companies,which is greater than the proportion of the main and equity dilution,so that the former shareholders of the restructuring will be benefited;Secondly,the assets contributed to the vast majority of net profit,which in turn resulted the significant increase in stock earnings,and the value of shareholders of listed companies will be significantly enhanced;Thirdly,the price-earnings ratio of listed companies will not be decreased due to the incorporation of assets.The relatively underestimated value of the primary market assets will achieve a high valuation through the secondary market due to the mergers and acquisitions to be placed into the listed company,and then,which will enhance the shareholder wealth greatly;In addition,only in terms of the stock price,among these samples,the company generally outperform the broader market,or because of the concept of reorganization speculation.Finally,from the view of two levels of integration,although the major assets of the merger and acquisition did not improve business efficiency,but significantly enhanced the shareholder value of listed companies.M&A maximized the valuation of assets from the relatively low level of the primary market jumped to the secondary market,accordingly,the shareholders of listed companies enjoyed a huge valuation premium.In the paper,the author concludes the profile of the major asset restructuring on the ChiNext based on the study:the scarcity of resources of listed companies in China has led to the long-term high of China's stock market valuation.In such a market environment,the ChiNext listed companies actively mergers and acquisitions relative to the "inexpensive"first-class market assets,and the introduction of performance compensation mechanism,access to the CSRC's recognition and approval,and ultimately the company has greatly enhanced the Shareholder value as well.So mergers and acquisitions become a high-effective growth way of the listed companies preferred to.In addition,the paper analyzes the problems behind this phenomenon:Firstly,ChiNext M&A "arbitrage" model is not sustainable;Secondly,"arbitrage" feasibility from the listed companies is due to the lack of supply of long-term high valuation,and the registration system and other market-oriented mechanism are to be pending;Thirdly,the performance undertaking mechanism will protect the former shareholders of the restructuring,and after the completion of mergers and acquisitions the investors are highly exposed to high price risks.At the end of this paper,these recommendations are made from the micro level and the macro level respectively.