A Study On Value Creation Of HNA Group’s Successive Overseas M&A

As China’s economy continues to grow,there is a growing number of companies going abroad for cross-border mergers and acquisitions.However,whether M&A can create value has also been the focus of academic debate.Some companies have expanded their businesses through M&A,but have subsequently encountered major financial crises.As a representative enterprise in the M&A wave,HNA Group,which had created brilliant achievements in its large-scale successive overseas M&A in the past,has now been split into four segments for bankruptcy restructuring.The study of the reasons why HNA Group’s successive overseas M&As eventually led to the failure of value creation can provide reference lessons for other companies when they go abroad for M&As.This paper firstly compares the research of domestic and foreign scholars on the motivation of successive cross-border M&A and the research on value creation of successive overseas M&A,and summarizes the path of value creation of successive overseas M&A.The paper then defines the relevant concepts and explains the theoretical foundation needed for this study;introduces the background of the aviation industry and the brief situation of HNA Group,composes the four stages of the development history of HNA Group,and analyzes the motives of successive overseas M&As of HNA Group.The quantitative and qualitative analyses of the value creation process are then conducted based on the history of HNA Group’s successive overseas M&As.The quantitative analysis part selects the financial index method and economic value added(EVA)method according to the actual situation of the case,and quantifies the effect of value creation of HNA Group’s successive overseas M&As in terms of financial performance trend analysis in four parts:profitability,asset quality,debt risk,and operational growth,and comprehensive performance analysis based on EVA.The qualitative analysis stage relies on dynamic capability theory to reveal the mechanism of value creation in overseas M&A;finally,it summarizes the problems in the value creation process of HNA Group’s successive overseas M&A and puts forward targeted suggestions,as well as the outlook for future research.The following conclusions are drawn from the in-depth analysis of HNA Group’s successive overseas M&A cases:(1)excessive non-relevant diversification and imprudent selection of M&A targets can weaken the business quality of enterprises.Before the M&A,an in-depth investigation should be conducted on the matching degree between the subject matter and itself,and the assets suitable for the enterprise should be selected for the M&A.(2)Enterprises should control the scale of M&A when conducting successive overseas M&A,reasonably assess their own resources and capabilities,focus on the quality of development,and avoid excessive financing and over-investment.(3)Enterprises’ internal capital market operations should focus more on efficiency than strategy.Internal capital market operations that are oriented to meet the strategic purposes of the enterprise and ignore the return on assets and operational efficiency of each member unit will result in an inefficient internal capital market.At the same time,overly complex internal capital market operations can quickly transfer local risks to the whole group.Enterprises should establish an efficient internal capital market system and a sound internal risk control system to reduce internal costs and risks and make the flow of capital more efficient.(4)Post-merger integration is an important stage of value creation.Attention should be paid to the postmerger integration process,leaving enough time for enterprises to digest and absorb the acquired assets and improve resource coordination.Efforts should be made on areas such as organizational structure,corporate culture,and strategic adjustment to bring into play the synergistic effect that M&A should have by eliminating duplicate positions,eliminating backward capacity,and improving communication efficiency.