The Research On The Motive And Performance Of Cross-industry M&A

Since1960s to1970s, the third M&A wave of the word, cross-industry M&A have play an important role in countries around the world. As a way of entering into the diversification, cross-industry M&A is very popular in China. How about the achievement of cross-industry M&A? Domestic and foreign scholars have done much study on the achievement of cross-industry M&A. The results vary from each other. The latest research finding is that cross-industry M&A will make the corporate performance decline. But there are many cases about the M&A success among those cases. Through the study of the successful and unsuccessful cases of cross-industry, this paper is mean to include the specific reasons of the success of cross-industry M&A and give some advice to the corporate for the future cross-industry M&A.About the success case I have chosen the case that the first pencil Co Ltd acquired limited company of shanghai old feng xiang in this paper. After analyzing the motivation of M&A and the performance of the first pencil before and after M&A, I can conclude some reason of the success of this case. First of all, the motivation of old feng xiang’s cross-industry M&A is diversification which can avoid the risk of pencil industry. The performance of old feng xiang is excellent through the result of the study, but it has nothing to do with the synergies. The reason of its success is that the subsidiary has made a great contribution to the profit of old feng xiang. As there are different reasons of unsuccessful cases, I have chosen six unsuccessful cases to analyze the reason of its failure respectively. The reason why they has failed can be summarized as follows:First, they have chosen the wrong industry; second, they have gotten a improper motive; third, they couldn’t afford the M&A; last but not least, the price is higher than the average level. Then I make a conclusion about the best period and the key performance of cross-industry M&A. Through the first part I have introduced the background/significance/domestic and foreign research of cross-industry M&A. At the end of this part, I have stated the innovation and the inadequacies of this paper. The second part is literature review of this paper. It has introduced the related concepts and theory of cross-industry M&A. The third part has introduced the motivation theories of cross-industry M&A. After introducing the motivation theories of general M&A, I have focused on the cross-industry M&A to introduce its M&A motivation. In the forth part I have analyzed the background and motivation of old feng xiang. In the next part, I analyzed the unsuccessful case. In the end, I have made a conclusion about cross-industry M&A.The contribution of this essay is to analysis the motive and performance of cross-industry M&A through micro-level and analysis the reason of unsuccessful cross-industry M&A by analysis the unsuccessful companies. Then I have given my suggestion based on this conclusion.The drawback of this essay is that the result of case study can only apply to some typical companies, and we need more hardworking to promote the view.