Study On The Cross-border M&A Motivation And Performance Of Auto-parts Industry

In recent years,China’s automobile industry is in a critical period from size to power.The huge market demand has promoted the rise and development of auto parts industry and attracted many foreign-funded parts companies.These enterprises have scale and technology that impresses clients.It is difficult for domestic companies to compete with them.As a result,most of domestic automobile parts enterprises are marginalized.Therefore,for the domestic enterprises,to seek the new way of development is imminent.Throughout the development of foreign enterprises,the development of auto parts industry mainly depends on two options: organic growth and acquisition-driven growth.Considering the characteristics of high technical barriers and long research and development cycle in the auto parts industry,endogenous growth requires high investment and more time,outward merger and integration has become an effective strategy for China’s auto parts enterprises to walk out of predicament.Taking Junsheng electronic as an example,this paper studies the motivation and performance of M&A in auto parts industry,and puts forward Suggestions on how to improve the M&A performance of auto parts enterprises.First of all,this paper reviews relevant literature on the motivation and performance of M&A,defines the concept of cross-border M&A,introduces relevant theories on the motivation of cross-border M&A,and understands commonly used M&A performance evaluation methods,thus providing research ideas for case analysis in the following part.Secondly,this paper makes an in-depth analysis of the development status and M&A status of the auto parts industry,and studies the motivation of M&A in the auto parts industry.Then paper introduces the M&A process of Junsheng electronics in detail,analyzes the M&A motivation based on the motivation theory,and evaluates the M&A performance.In the case study,event study method,balanced scorecard and EVA index analysis method are adopted to comprehensively analyze the market reaction,business performance and changes of EVA after M&A.It is found that market performance is good,business performance of enterprises is improved after M&A,and capital utilization efficiency is also significantly improved.Finally,by summarizing the motivation,process and performance of the M&A of Junsheng electronics,we can reach the following conclusion: First,merger and acquisition activities of enterprises have basically realized their main motivation.This cross-border M&A is feasible and effective.Second,cross-border M&A activities can improve the shareholder wealth effect of Junsheng electronics in a short term,and have a fair market performance.Third,Junsheng electronics is in good financial condition after the merger.The merger activity has improved its operating capacity and growth ability,but has downstream impact on its profitability and debt paying ability,resulting in increased financial risks.