Analysis On The Motivation And Performance Of Diversified M&A In Lushang Health Industry Development Co.,Ltd

Due to the changes in the real estate market and the changing philosophies of the public,the real estate industry should actively undergo transformation,maintain strategic acumen,accurately grasp market changes and plan ahead for better development results.The real estate industry can use diversified M&A strategies to enter other fields to achieve higher quality development,however,the intricacies of diversified operations and how they can positively contribute to the long-term operation of the company are still major issues worth exploring.Using literature research,case studies and comparative analysis,this paper takes the case of Lushang Development’s M&A as an entry point to delve into the motivations and performance of diversified M&A.Firstly,a detailed reading of the relevant literature and a description of the actual circumstances of this M&A case are presented,which leads to an analysis of Lushang Development’s M&A motives,including both external and internal factors.Secondly,the M&A performance of Lushang Development’s acquisition of Shandong Forida and Focus Bio is examined,mainly by applying the event study method and Tobin’s Q method to analyse the post-merger market response.Finally,the post-merger financial performance of Lushang Development and the pre-and post-merger profitability of each business segment are explored based on principal component analysis,in addition to the use of non-financial indicators to study the post-merger impact effects on Lushang Development Company.In the current market situation,Lushang Development’s M&A activities are influenced by many factors.These include external factors such as the steady growth of the cosmetics and pharmaceutical industries and strong government support,and internal factors such as the company’s transformation through its "big health" strategy to find new profit growth points and achieve synergies in order to reduce operational risk.By analysing the effects of diversified acquisitions,from the perspective of risk diversification,Lushang Development’s cross-sector business planning can effectively transfer the operational risks of its real estate industry,thus making it more resilient to risks than its single-sector business.In terms of market reaction,CAR has shown a clear positive response,indicating that the market is generally supportive of Lushang’s two diversified acquisitions.An analysis of Lushang Development’s financial performance after the M&A reveals that the diversified M&A has improved the company’s profitability,offsetting some of the revenue and profit decline in the real estate segment and improving operating performance.Finally,the case study suggests that the company should make reasonable forecasts for strategic transformation and seize the opportunity to enter new industries;diversify moderately,and should grasp the "degree" of diversification in M&A;increase post-merger integration efforts,as the growth of a company after M&A depends on the company’s post-merger integration;and determine a reasonable debt size so that This can effectively control the amount of financial risk.