Research On The Performance Of Enterprise Mergers And Acquisitions

With the development of the economic,the industry competition increases.The firm uses M&A(merger & acquisition)as the firm strategy to enhance its competitive power.The firm can find new point to gain profit?decrease product cost?decentralize the business risk of the enterprise by implementing M&A activities,in the end the firm will achieve the growth of the firm's value and cooperative effect.However,not all M&A activities can get profit.In the waves of M&A,there are many M&A failure cases due to blind M&A?bad integration.Not only did companies not benefit from M&A,but they also suffered huge losses.Under this background,more and more people pay attention to M&A performance evaluation.There still are flaws in the past study: First,many scholars got different conclusion due to diverse methods?data?angels.Second,foreign scholars mostly researched M&A performance in terms of the industry,and domestic scholars only can use one method to analyze multiple M&A activities or use many methods to analyze one M&A activity because of the restriction of capital market.So,this paper will use multiple methods to analyze how can firm's multiple M&A affect performance.China Sun Pharmaceutical Machinery actualized M&As since it went public.Its M&A activities between 2014 and 2015 are large scale and high premium,they also showed that the company wanted to change.However,its revenue and net profit constantly declined since 2015,and its net profit has been negative over a long period of time.Finally,it delisted for financial situation.Therefore,it is important to study how can M&A activities affect its performance.By reading a large number of domestic and foreign documents,this paper defines what is M&A,related theories about M&A and some methods to evaluate the performance.Then,this paper illustrates the basic situation of China Sun Pharmaceutical Machinery M&A in detail,including general condition of M&A,M&A events and M&A motivations.This paper employs several means to analyze the impact of its M&A activities on the performance: by using event study method,this paper analyses how capital market and investors react to its M&A activities and the short-term fluence of M&A on performance;by using operating performance,this paper analyses the state of operation before and after M&A,also learns how M&A affect the performance in the long term;by using EVA and its indicators,this paper judges these activities created value for the company whether or not.Through multiple methods,this paper evaluate the company's M&A performance comprehensively.Through analysis,the CAR of M&A events are grater than zero,shows that M&A activities improved the performance in short term.The analysis of financial indexes suggests that the company decreased the ability to profit?got worse capital structure?operated hard by M&A,which means M&A activities damaged the long-term performance of the company.Via the analysis of EVA and its related indexes,it indicates that M&A only created value for the company's shareholder in the year,and these activities didn't create steady long-term value for them.Overall,the M&A activities were failure.Based on the result of the research,there are several reasons lead it to bad M&A performance: 1.The merger motivation was divorced from the reality of the enterprise;2.Blind diversification;3.High price in the deal of M&A;4.Insufficient resource to control;5.Inadequate investigation before M&A;6.Irrational way to pay;7.Poor operation integration.And there are suggestions to improve M&A performance: 1.The development strategy shall be made on the firm's actual circumstance;2.Avoiding blind diversified M&A;3.Making M&A deal price in reason;4.Finding more ways to finance;5.Investigating the company sufficiently before M&A;6.Improving the way to pay;7.Increasing the operation integration.The conclusion of the paper is as follows : 1.Good short-term M&A performance doesn't mean the improvement of long-term M&A performance;2.Large-scale,high premium M&A is disadvantage for the development of the company;3.The company shall take multiple measures to ensure M&A performance.