Research On Motivation And Performance Of East Money Acquiring Tongxin Securities

Internet finance becomes one of the most popular personal finance platform as the information technology evolves so rapidly,the large user group supports the prosperity of the industry.At the same time,the government steps in with various policies to support and regulate the Internet Finance industry.In order to integrate and complement both of the Internet finance and traditional finance while they are developing and changing,merge and acquisition stand out as an efficient way.This dissertation selects the case of the East Money's acquisition of Tongxin Security as one of the most typical ones that shows the integration of Internet finance and traditional finance.First of all,this dissertation introduces the concepts of merge and acquisition and the background of the two parties,the process of acquisition,then analyzes the four primary reasons behind the acquisition.Then this dissertation analyzes the short-term and mid-to long-term performance by applying methodologies of event study,financial indicator analysis and EVA analysis.The study shows the primary motivation behind the acquisition are to widen the business line,to complement of the advantages of both companies,maximize the synergy effects and seek support from the government.After the acquisition,the coverage and number of the branches has improved and the structure of the income source is optimized,overall,the performance of security business has improved.When analyzing short-term performance,this dissertation employs the methodology of Event Study,by calculating cumulative abnormal return and reach a positive result,which reveals this acquisition brought excess return to the shareholders.When analyzing the long-term performance,the methodology of financial indicator analysis is applied,to focuses on profitability,security and growth of the company.The indicators of net operation income,return on assets and return on equity reveal one company's level of profitability,and debt asset ratio,equity ratio and debt to net worth ratio show the state of company's security.Additionally,net profit growth rate,operation income growth rate and return on assets growth rate reflect the status of growth.The result shows East Money's performance improves significantly.Then the method of EVA analysis was employed that shows the efficiency of the use of fund has improved dramatically.The acquisition can be regarded as a successful one as it improves the company's competitivity on the market.The analysis on the motivation and performance of the acquisition of East Money and Tongxin Security will provide reference in relevant study on Internet finance company's merge and acquisition as well as guide the development of the industry.