A Study On The Motivation And Performance Of M&A Of Listed Companies In China’s Science And Technology Board

On June 13,2019,China’s science and technology board was officially opened on the Shanghai Stock Exchange.The operation mode of the board is optimized and reformed on the basis of the existing main board,and it becomes the first section of China to implement the pilot registration system.On the one hand,the board is a supplement to the existing capital market to meet the needs of the emerging high-tech enterprises and the development of the capital market,providing them with more sufficient capital channels and a broader space for growth,and on the other hand,it is designed to avoid the loss of high-quality high-tech enterprises’ resources to the outside world,to guide the increasingly important technological and human resources in the global market to stay in the country spontaneously,and to attract more high-tech enterprises that meet the requirements of the national strategic deployment and have the ability to develop in the market.As we can see,companies that meet the positioning of the board and are successfully listed on the board are generally characterized by strong innovation,high profitability and fast growth,which also means that competition in the same industry is fierce and it is difficult to expand rapidly and gain competitive advantages by relying solely on their own operation and R&D.M&A is usually one of the important ways for listed companies to improve the quality of earnings,enhance R&D strength,obtain brand effect and maintain competitive advantages.Therefore,in order to stand out in the highly competitive market environment,many companies listed on the science and technology board choose M&A to accelerate their outward development and increase their competitive advantage by using the synergistic effect of M&A.However,there are only 73 cases of M&A and restructuring in China’s Science and Technology Board since its opening,and only 4 cases involving major asset restructuring.Therefore,the practical experience of M&A and restructuring on the board is very scarce,and it is important to study the existing cases of M&A of companies listed on the board for the practical operation of M&A of listed companies on the board in the future.This paper takes the first case of M&A on the board,HYC’s M&A of Olyto,as an example,and introduces the whole process of HYC’s M&A of Olyto from the background of the M&A policy on the board and the current M&A data.Then,the motivation of HYC’s M&A is analyzed from two levels:internal management and external environment.It is considered that the pursuit of synergy effect and technical resources is the main internal motivation,and the pursuit of new markets,diversification and reasonable M&A timing is the secondary internal motivation.Relieving the pressure of high growth in the science and technology board is the main external motivation,and policy support is the secondary external motivation.The article next evaluates the M&A performance of HYC in a holistic manner.Firstly,the event study method was applied to evaluate the short-term market performance,and it was found that the cumulative excess return of HYC was positive within 20 days after the M&A occurred,which indicated that the M&A brought significant positive market performance to HYC in the short term;secondly,the financial performance was analyzed by using the financial index analysis method,and it was found that the profitability and growth ability of HYC were improved through the M&A,and the synergistic effect was brought into play.however,in terms of operating ability and solvency,the performance was not obvious or even reversed because the post-acquisition integration was not timely and effective;Subsequently,non-financial performance is analyzed using non-financial indicators to supplement the parts not covered in the previous market performance and financial performance evaluations.The analysis finds that after the M&A,HYC’s overall market share has increased,its products are more diversified,its innovation and R&D capabilities have improved and its goodwill impairment risk is low.Overall,the non-financial performance is good and in line with the strategic objectives of the company.Finally,we summarize the background,motivation,and performance characteristics of the M&A transaction of HYC,and point out four insights based on the findings,including the selection of target companies,timing of M&A,strengthening the use of policies,and paying attention to the integration of weak links,in order to provide reference advice for the M&A of subsequent companies listed on the Science and Technology Board.