first, mergers and acquisitions can bring economies of scale to enterprises. This is mainly reflected in two aspects: first, the economies of scale of production of enterprises. Enterprises can supplement and adjust their assets through mergers and acquisitions to achieve the best economic scale and reduce their production costs; Mergers and acquisitions also make it possible for enterprises to concentrate on producing a single variety in one factory under the premise of maintaining the overall product structure, so as to reach the level of specialization; M&A can also solve a series of problems brought by specialized production, so that all production processes can cooperate organically to produce economies of scale. The second is the scale effect of enterprises. Through mergers and acquisitions, enterprises can provide specialized production and services for different customers or markets to meet the needs of different consumers; It is possible to concentrate enough funds on research, design, development and production process improvement, and quickly introduce new products and adopt new technologies; The expansion of enterprise scale makes the financing of enterprises relatively easy.

second, mergers and acquisitions can bring market power effect to enterprises. Vertical mergers and acquisitions of enterprises can effectively control competitors' activities by controlling a large number of key raw materials and sales channels, and improve the entry barriers and differentiated advantages of enterprises in their fields; Through horizontal mergers and acquisitions, enterprises can increase market share and increase market control by reducing competitors. Usually, in the following three cases, it will lead to the merger and acquisition activities of enterprises aimed at strengthening market power: first, under the condition of declining demand and overcapacity, enterprises will obtain a more favorable position to rationalize their industries through mergers and acquisitions; Secondly, in the case that international competition makes the domestic market suffer from the strong penetration and impact of foreign enterprises, enterprises may go through mergers and acquisitions to fight against foreign competition; Thirdly, as the law becomes stricter, various links between enterprises, including collusion, become illegal, and enterprises can "internalize" some illegal practices through mergers and acquisitions, so as to continue to control the market.

Thirdly, M&A can save the transaction cost for enterprises. Enterprises can save transaction costs from the following aspects through mergers and acquisitions: First, enterprises acquire knowledge through investment in research and development. In the case of asymmetric information and externalities, the market value of knowledge is difficult to realize, and even if it is realized, it will cost a high negotiation cost. At this point, if the knowledge is used in the same enterprise through mergers and acquisitions, the purpose of saving transaction costs will be achieved; Secondly, as intangible assets, trademarks and goodwill of enterprises will also encounter externalities. Because a trademark user reduces the quality of its products, he can get most of the benefits of cost reduction, and the loss of goodwill is borne by all trademark users. One way to solve this problem is to increase supervision, but it will greatly increase the cost of supervision; The second is to turn trademark users into internal members of the enterprise through mergers and acquisitions. As an internal member, lowering the quality will only bear the loss and not benefit, eliminating the opportunistic motivation; Thirdly, the production of some enterprises needs a lot of input of intermediate products, and there are some problems in the market of intermediate products, such as uncertainty of supply, uncontrollable quality and opportunistic behavior. Enterprises can eliminate the above problems by turning their partners into internal institutions through mergers and acquisitions; Finally, enterprises form a large-scale organization through mergers and acquisitions, which separates the functions within the organization and forms an internal market system based on management. Generally speaking, the management cost of coordinating internal organizational activities with administrative instructions in enterprises is lower than the transaction cost of market operation.

in addition to the above performance, the change of external environment is also an important motivation for M&A.. With the end of the Cold War, the world pattern has gradually changed from bipolar to multipolar, and international competition has shifted from political struggle and military confrontation to economic competition. At the same time, with the acceleration of economic globalization, more enterprises have the opportunity to enter the international market. In order to respond to the increasing pressure of global market competition, multinational enterprises in developed and developing countries are increasingly seeking to further develop global operations through foreign direct investment and non-equity investment, so as to develop new markets or use the advantages of production factors to establish international production networks, and mergers and acquisitions are the most effective way. As pointed out by the United Nations Conference on Trade and Development in the World Investment Report 1996, "Merger and acquisition are their preferred foreign production channels. In fact, a considerable part of the increased foreign investment in 1994 and 1995 was caused by corporate mergers and acquisitions. "