Research On The Financial Performance Of Longbai Group’s Horizontal Mergers And Acquisitions

The M&A market of Chinese listed companies has recently reached a prosperous stage of growth.Since 2015,with the end of the “12th Five-Year Plan” and the preferential merger and acquisition policies issued by various ministries and commissions,a large number of mergers and acquisitions have emerged.Enterprises have joined the ranks of M&A companies with different objectives,such as optimizing resource allocation,expanding business scale,achieving strategic transformation,restructuring production capacity,etc.Realizing the swift enlargement of their business,Chinese companies are altering and adjusting their industrial structure,or even creating fresh product areas through mergers and acquisitions.Mergers and acquisitions have been successful in attaining certain strategic objectives for some businesses,yet with the passing of time,the failure to meet the expectations of these transactions often follows their completion,leading to a decline in the performance of the merged entities.The risks and problems brought by mergers and acquisitions to enterprises are also gradually highlighted.Despite the fact that both sides of the merger and acquisition will sign a performance agreement,there are still some mergers and acquisitions that do not meet the stipulated performance.On the contrary,the acquirer will cause goodwill impairment due to the failure of the target enterprise’s performance,thus dragging down the company’s profits.So,what is the fundamental reason for enterprises to conduct M&A transactions,and what impact M&A will have on the performance of enterprises,have become issues worthy of our in-depth discussion and research.This thesis,based on the research of both domestic and foreign scholars on mergers and acquisitions,establishes a financial performance evaluation system for Longbai Group.To begin,it reviews and summarizes the research on M&A motivation and financial performance evaluation,as well as expounding the fundamental concept and pertinent theoretical foundation of M&A financial performance.Analysing the financial performance of Longbai Group’s horizontal M&A from three perspectives financial indicators,EVA and future cash flow.This thesis reveals that in the short term,this merger and acquisition will enhance the company’s solvency and profitability;however,it is unlikely that mergers and acquisitions will have a lasting effect on its financial performance.Longbai Group must rely on its further strength to pursue growth.At the same time,it can be said that in the competitive market environment of the whole industry,the horizontal merger and acquisition of Longbai Group has improved its overall competitiveness,revitalized the enterprise,optimized the industrial structure,and made contributions to the sustainable development of the enterprise.The horizontal merger and acquisition of Longbai Group has been seen to have a positive effect on the market competitiveness of enterprises,as well as its financial performance,as evidenced by the case study;the market reaction following the merger and acquisition was also positive.Plus.The analysis of the financial performance of Longbai Group’s merger and reorganization is the aim of this thesis,providing a reference for those companies that are ready to take action.