Research On The Motivation And Performance Of M&A For Mobile Social Platform

Merger and Acquisition(M&A)has become a ubiquitous business activity in recent years.The boom of M&A has some features such as large volume of transaction,high frequency of transactions happened and wide range of industries involved.Internet companies,as emerging companies that have developed rapidly recently,have also seized this trend.Industry benchmark,such as BAT,decided to enrich their own business model,fulfill strategic plans and increase market shares through M&A.In addition,keeping focus on users and information flow makes this industry more distinctive.MOMO paid over $700 million to acquire its competitor,Tan Tan,at the beginning of 2018.This thesis purposes to analyze the motivation and financial performance of MOMO,which is a representative as a mobile social platform.Although the M&A continues to hit,there are only a handful of successful M&A cases.MOMO spent more than $700 million dollars to acquire the competitor in the early 2018.This paper focuses on the M&A motivation and performance analysis of the social application platform in the Internet industry.This article is divided into five chapters,and the structure of each chapter is shown as the following:The first chapter is the introduction,which includes the research background and its significance,and then it specifies research methods and framework.Lastly,this chapter ends with research innovations and deficiencies.The second chapter covers relevant theoretical basis.This part defines the concept of mergers and acquisitions and other relevant definition,and then illustrates theory in respect of motivation of mergers and acquisitions.The third chapter is literature review,and it summarizes related literature from motivation and performance of M&A aspects.The fourth chapter is an analysis of industry background of mobile social platform.Mobile social industry features on large amount of users,great potential of development and the trend of market segmentation.Understanding the relevant backgrounds of such an industry will help to analyze the motivation of M&A for MOMO.The fifth chapter is an analysis of MOMO acquiring Tan Tan.This part begins with the analysis of motivations for MOMO to acquire Tan Tan.That is mainly based on adjusting business model,achieving synergy effect,fulfilling strategic complementarity and increasing market share.Such a decision is also affected by internal development constraints and changes in the external environment.Secondly,this part analyzes the market reaction to this acquisition event by even study methodology and after-acquisition financial performance of MOMO through accounting-based measures.It was found that the financial performance of MOMO was attractive in the first quarter after the merger,and it slightly slowed down in the second quarter.This change can be attributed to acquisition event and subsequent cost of debt.However,the financial performance of MOMO is basically consistent with the industry level,and it is within the normal range of fluctuations.This chapter ends with the potential problems that may exist during the process of M&A.The sixth chapter is the conclusions and recommendations of the case study.This paper suggests that: i)MOMO should continue to deepen its business model for the purpose of stimulating the potential of value-added service revenue and promoting overall revenue growth;ii)identify and control financial risks caused by mergers and acquisitions;iii)share user resources;iv)put forward to a good and tailored plan after M&A.