The Impact of Mergers and Acquisitions on the Long-Term Performance of Securities Firms

Abstract

In China, the generally small size and weak financing capacity have affected the growth of the securities companies. In recent years, many securities firms have adopted mergers and acquisitions (M&A) to expand the size of their businesses and it is necessary to study the impact of M&A on their long-term performance. This paper selects the acquisition of Guangzhou Securities by CITIC Securities as a case study to examine the impact of M&A on long-term performance. The paper first analyses the motivation for the M&A and describes the background of the two companies. Then it analyses the long-term performance of CITIC Securities before and after the acquisition. As for the financial indicators, the paper compares profitability, solvency, operating efficiency and growth capacity. In terms of non-financial indicators, it focuses on market share and number of business offices. Finally, it makes some suggestions for M&A in the Chinese securities industry. The paper finds that CITIC Securities' profitability, solvency and operating efficiency have all improved after the M&A, and the M&A has brought considerable gains. Its business offices in Guangdong operations have increased, and its market share has further expanded. In the future, CITIC Securities will need further follow-on integration to expand synergies and improve the company's performance.