Research On Financial Performance Of TH Company's Reverse Merger

Reverse merger is a process in which a non-listed company acquires the majority ownership of a shell company through certain acquisition methods and injects assets to achieve the listing indirectly.Due to the difficulty of IPO and the urgent demand of planned listed companies,reverse merger become a popular choice of many planned listed companies.TH company is a nuclear power equipment manufacturer,which has a good sustainable development capacity.By studying the financial performance of the reverse merger of TH,we try to find out what it is worthy of reference in decision-making and how can it makes the company develop in the fierce competition.Based on the event of TH company's reverse merger of DF company,this paper summarizes the research contents related to reverse merger and financial performance in domestic and foreign literature to make a brief analysis of the situation and the motivation of TH and DF before the reverse merger and emphasize on the research of the post-marketing market response and mid and long-term financial performance of the company.On the one hand,by using the event study methods and computing the abnormal return of 21 days before and after the event day,we find the market response is excellent and obvious;on the other hand,by using principal component analysis,we evaluated mid and long-term performance of 12 financial indexes which are based on the financial statements from 2011 to 2017 of TH,and the result shows that the profitability status of TH have a significant improvement after reverse merger.The promotion of operational growth is also obvious,as well as the debt risk status is slightly better than before,but the asset quality status has not improved significantly in the long run.In general,TH's reverse merger has a good result at the beginning.Although the momentum was insufficient during the late stages,the overall situation was better than before.By analyzing the evaluation results of this event,this paper illustrates the positioning of shell company,the selection of merger mode and the direction of sustainable development,as well as extract universal significance to peer enterprises in reverse mergers: seizing the opportunity under the policy advantages,selecting high-quality shell company to reduce integration risks,determining reasonable mergers mode to save costs,and focusing on product quality and management efficiency to achieve sustainable development.All these factors are positive for the future development of TH and for the reverse merger guidance of companies in the same industry.