Case Study On The Financial Performance Of Cross-industry M&A

Every enterprise has its own life cycle.When it develops to a certain extent,the enterprise will face the problems of the saturation of product market,the change in the customer demand and so on.However,cross-industry M&A enables enterprises to quickly cut into another target market and obtain the existing resources in the market to achieve diversification or strategic adjustment.Cross-industry M&A has both positive and negative effects on corporate performance.Although the results of theoretical research tend to support the latter,more and more enterprises are keen on cross-industry M&A in practice.Especially after the rise of "Internet mode",some old traditional enterprises have to adjust their strategies under the severe downward pressure of the market.At present,China is in the critical stage of industrial upgrading and transformation.In recent years,with the improvement of people's consumption level and quality of life,entertainment industry,as a new industry,has developed into one of the pillar industries to promote the development of national economy.The unprecedented development of entertainment industry has attracted many investors in the capital market.Lots of traditional enterprises enter the entertainment industry through cross industry M&A,but the performance after M&A will be different due to the integration of enterprises,which is also the key problem of this paper through the selection of cases.The case of Shenghua Biok's merger and acquisition of Yanlong technology selected in this paper is a typical cross-industry merger and acquisition transaction.Among them,Shenghua Biok,the acquirer,is a traditional enterprise mainly engaged in agricultural and veterinary drugs and zirconium series products,and the acquire,Yanlong technology is a new industry mainly engaged in game industry.Shenghua Biok plans to achieve strategic transformation and enter the game market through acquisition of Yanlong technology.On this basis,it will make use of Yanlong technology's high-quality resources to build a "Pan entertainment" business platform and improve the industrial chain layout.Through the comparative analysis of the performance of M&A parties before and after the merger,this paper points out thepossible problems in the development of M&A parties,and puts forward valuable suggestions for the selected cases and other cross-industry M&A transactions.First of all,based on reading a large number of domestic and foreign literature related to M&A,this paper expounds the theory of M&A.Secondly,this paper introduces the operation and the process of M&A of both sides,and briefly analyzes the motivation of the cross industry M&A of Shenghua Biok on the base of theoretical basis.Then,this paper analyzes the M&A performance of Shenghua Biok in detail,including short-term market response analysis and long-term financial index analysis,and uses the Balanced Scorecard to make supplementary analysis from the customer dimension,internal process dimension and learning and growth dimension,combined with the development strategy of Shenghua Biok.Finally,according to the analysis results of the performance of M&A,this paper obtains the relevant enlightenment.From the analysis,we can see that the overall performance after the merger and acquisition of Shenghua Biok is better.In the short term,the market reacted well.After the resumption of trading,Shenghua Biok's shares rose for a week,and shareholders' wealth was greatly improved.In the long run,the solvency capacity have improved,and the high profitability of the game industry has increased the profit space of Shenghua Biok.The changes of income composition,product structure adjustment and R&D investment level also show that the acquisition of Shenghua Biok is relatively successful,and the strategic transformation has been basically realized within two years after the acquisition.However,the integration after M&A is a long-term process,and there are some problems in the current integration process of Shenghua Biok,such as the rising management costs and the sharp decline in asset utilization efficiency,which lead to the poor profitability and operation ability,and the saturation of the game market,which leads to the need to speed up the improvement of the "Pan entertainment" industrial layout,which will affect the healthy development of the enterprise in the future.In order to avoid further losses in the process of integration development,this paper puts forward some suggestions for the problems in integration.For other enterprises that have already implemented cross industry M&A or will implement cross industry M&A,this paper also has some reference value.