The Diagnostic Report Of KS Company's Vertical Merger And Acquisition Problem

Last several years,China's economy continues downward,the three major industries facing economic structure adjustment and transformation,under the new norms of economic development,mergers and acquisitions market becomes active.In the past three years,the number and scale of M&A transactions have been greatly improved in the domestic market,enterprises strive to achieve their own transformation and development through M&A.M&A can not only bring in profit,but also contains a huge risk.Looking back on domestic and foreign mergers and acquisitions cases,the results show that the failure of mergers and acquisitions is extremely high.KPMG and other organizations have summed up the research of enterprise merger results,they point out half a year after the acquisition,nearly half of the firm's production efficiency slows down.In the year after the completion of the merger,Nearly half of senior executives were unable to adapt to switching to rival firms after being acquired,2/3 of the enterprises' profits grew negatively.The object of this study is KS company.It is a share listed company with state-owned assets injection.the company mainly engaged in the production of ITO conductive film glass,TFT-LCD thin glass,touch panel and other electronic display devices.KS company.tries to agglomerate the comprehensive competitive power in LCD industry,expand product sales,reduce transaction costs.In the period from 2014 to 2015,KS has acquired GX technology company.GX is located in the lower reaches of the industrial chain.It mainly produces LCD module and touch screen module.But after the whole deal was over,KS did not meet its pre-market expectations of achieving its own cost reductions,through the diagnosis,some of the company's key operating indicators were worse than pre merger deterioration of the GX technology company much lower than the industry average,the company headquarters is to increase development profits.This paper combines transaction cost theory,synergy effect theory,value chain theory and other related theories of enterprise mergers and acquisitions and using data collection,management interviews,traditional financial analysis,DuPont analysis and other diagnostic methods,diagnose the problem that KS company leads to the decrease of its profitability after merger and acquisition,and propose improvement suggestion,to improve its successful rate of mergers and acquisitions.