Research On The Impact Of Mergers And Acquisitions On The Financial Performance Of Target Companies

With the steady increase of China's economy,all kinds of enterprises are fierce in competition increasingly.Famous American Nobel prize-winning economist Stigler analyzed the top 500 big companies in the United States deeply,and concluded that none of the companies became successful just relying on internal expansion rather than mergers and acquisitions.Cosmetic industry in China plays an important role in our mind for its closeness to our daily life.Although cosmetic industry developed extremely rapid in our country,foreign brand had occupied the main position.With the infiltration,daily chemical industry are startling by each step.This article mainly study the case of “Ping An ” merged “Shanghai Jahwa”.“Shanghai Jahwa” is the target enterprise.Analyzing the financial performance of “Shanghai Jahwa” before and after acquisition by financial indicators,we study whether mergers and acquisitions can bring a good performance or not.In this paper,author analyzed the financial performance of “Shanghai Jahwa” before and after acquisition by financial indicators with nearly six years of financial data,and then make a conclusion by comparing the financial indicators.Main sections of this paper are as follows: Chapter one is an introduction.This introduction mainly describes the research background,the development of mergers and acquisitions,the meaning of this study and then review the literature study both from foreign countries and our country.Last part explains research contents,research methods and innovations.Chapter two are related concepts and theoretical basis.This chapter consists of three sections.The first section introduces the relevant concepts and theoretical basis of mergers and acquisitions from the aspects of the definition of mergers and acquisitions,mergers and acquisitions motivation theory and the merger integration respectively.The second section defines the concept and the classification of mergers and acquisitions performance.The third section mainly describes the financial performance evaluation methods.Chapter three mainly introduces the basic situation of mergers and acquisitions,specific speaking,which includes the both sides,the motivation of mergers and acquisitions,the process of mergers and acquisitions and the implementation of mergers and acquisitions.Chapter four is specific to the case study.Firstly,this paper analyzes the short-term performance changes before and after merger by Event Study method.Then,based on the financial data from 2010 to 2015 of “Shanghai Jahwa”,this paper analyzes financial performancechanges of “ Shanghai Jahwa” from the perspective of general financial indicators and comprehensive financial indicators.Chapter five are conclusions and inspirations.The conclusions are as follows: for the target enterprises,the mergers and acquisitions behavior has a positive role in promoting the stock market in the short term.Operation ability,profit ability,debt paying ability,development ability are better than the same industry,the financial performance of “Shanghai Jahwa” has improved.The inspirations are as follows: mergers and acquisitions should meet the overall strategy and focus on the merger integration.