Research On The Performance That Small Company Monarch Merged And Acquired Large Company Oceano

As the scale of urbanization expands constantly,people’s demands for residence have been improved.In the meantime,due to constantly growing household disposable income,consumption standard is increasing gradually,which means that people’s demands for products have been diverse and personalized increasingly.Guided by this change,the household industry is moving towards the trend of “overall house fitting-up” from the sales of single product in the past.In this context,Chinese sanitary ware enterprises want to branch out and occupy more market shares by this opportunity,and enterprises can seek diversified development and adjust the industrial distribution by M&A.The M&A case used in this paper is highly representative in the sanitary ceramics industry because Monarch and Oceano in this case complement each other in the aspects of market,channel and technology,which is of certain reference for the enterprises who tend to expand the market in the same industry by M&A.In the meantime,Monarch also completed the rare M&A that a weak company merges and acquires a strong company,which is of certain research value.In order to analyze this case,this paper makes a discussion in four aspects:firstly,the introduction to the M&A that a weak company merges and acquires a strong company,motivation theory and M&A performance evaluation methods are introduced;secondly,under the background of overall house fitting-up,the development situations of the sanitary ware and ceramic industries,overviews of both parties in M&A,analysis of M&A strategies,M&A motivations and specific items in M&A are narrated;in the third part,for the analysis of corporate performance,event study is used to assess market performance from the short-term perspective,and the long-term M&A performance of Monarch is analyzed in the financial and non-financial aspects,and the main factors that may affect performance are analyzed and excluded successively to further verify that the performance is caused by M&A;in the fourth part,combining with the above performance analysis results,related suggestions and enlightenments are proposed for Monarch and other enterprises in the same industry.Through the whole-length analysis,this paper argues that this M&A greatly improves the profit,growth and operation capacity of Monarch,but influenced by high level of debt caused by the M&A of Oceano,insolvency risk has been increased after the M&A.Meanwhile,as the direct-sale project is implemented constantly,the payment period has been extended,and cash flow support behind income has been reduced,which shall be solved emphatically by Monarch in the future.Meanwhile,this case can provide reference for the M&A of other enterprises in the same industry.During the M&A,enterprises shall hire professional agencies to make a detailed investigation into the objects of merging by combining with related industrial policies,so as to design reasonable M&A schemes.Besides,according to own conditions and development strategies,appropriate M&A methods shall be selected.At the end,based on the actual situation of two parties,the specific integration of sales,R&D and management after M&A shall be considered fully.Overall,due to this M&A that a weak company merges and acquires a strong company,Monarch successfully enters the mid-to-high end ceramic field and improves its industrial status and market competitiveness.