Abstract: Based on the perspective of saving contract cost, this paper distinguishes horizontal M&A and vertical M&A, and tests the influence of internal motivation of vertical M&A on long-term M&A performance.The results show that: specific assets are the necessary conditions for vertical M&A, and further investment is the intrinsic motivation of vertical M&A; compared with horizontal M&A, vertical M&A has better long-term M&A performance, and it becomes more significant with the extension of observation period.Through the mediating effect model test, we find that further investment has a significantly positive impact on the long-term performance of vertical M&A.Vertical M&A can not only save the high cost of signing contracts caused by special assets, but also produce new organizational costs. The income from further investment offsets the new costs is the intrinsic motivation of vertical M&A, and it will bring good long-term M&A performance, but it will be gradually reflected after a period of time.The policy implication of the conclusion of this paper is to emphasize the correlation between M&A motivation and M&A performance, while M&A aiming at reducing transaction costs tends to have better long-term performance, which is also an important premise for the relevant M&A policies to play a role.

Key words: transaction cost, intermediary effect, technology change, enterprise strategy