Study On The Motivation And Consequences Of SaaS Enterprise Spin-Offs

The advent of cloud computing era has realized everything on the cloud,which brings convenience to business operation and also means that the mobile Internet era will be replaced,which is the opportunity and challenge for SaaS industry.In the era of cloud computing,more and more enterprises will realize that digital transformation is a "must" for enterprise development,and SaaS enterprises,as a service provider of digital transformation,will gain more market space.But on the other hand,due to the fading dividend of the mobile Internet era and the increasing cost of data operation in the cloud computing era,the already poor business environment of SaaS enterprises has become even worse,and the competition in the industry has become increasingly fierce.In this context,some SaaS companies want to achieve the development of their core business while retaining the main body and start to look for effective solutions.As a means of capital operation,the spin-off can not only help enterprises raise financing,but also optimize the allocation of enterprise resources and realize business core strategy,which is gradually favored by SaaS enterprises.With the opening of Science and Technology Venture Board and the new regulation of SEC,the threshold of spin-off listing for domestic high-tech enterprises has been lowered,and the spin-off listing of SaaS enterprises has a new opportunity.Since the theoretical research lags behind the practice,this paper tries to theoretically analyze the specific cases of domestic spin-offs of SaaS enterprises,in order to provide some reference for the spin-offs of SaaS enterprises and enrich the case database.This paper takes Kingsoft Office as a case study,and combines the current situation and characteristics of the SaaS industry to explore the main motivation for the spin-off of Kingsoft Office: in the context of accelerated localization of information technology and with the support of national policies,the company seizes the opportunity to spin-off in order to meet financing needs,strengthen corporate governance and enhance core competitiveness.This paper studies the effect of the spin-off of Kingsoft from different dimensions.Firstly,we analyze the impact of the spin-off on the parent-subsidiary market and find that the spin-off does not benefit the parent company in the short term,but is beneficial to both the parent and the subsidiary in the long term.Secondly,we use EVA value analysis to analyze the efficiency of the use of financing funds before and after the spin-off,and find that Kingsoft Office can create more wealth for shareholders while improving its own intrinsic value.Again,a comparative analysis was conducted using a system of financial indicators,and it was found that the spin-off improved Kingsoft’s solvency in the short term and enhanced its profitability and growth sustainability,but its operating capacity dropped significantly after the spin-off.Finally,the analysis was extended to non-financial indicators.After the spin-off,the number of active users,user stickiness and payment rate of Kingsoft Office have been greatly improved,and the overseas business and Information Technology Application Innovation business have developed rapidly.Overall,the spin-off has a positive impact on Kingsoft Office,but the positive impact is of limited duration and improves the market value of the parent company in the long run.At the same time,the spin-off is not a once-and-for-all solution for SaaS companies’ development,and there are still many issues that need attention.To address these issues,this paper makes corresponding suggestions to SaaS companies and regulators to be spun-off,hoping that this can promote the sound development of the SaaS industry in China.