Liquidity has multi-levels meanings, which are important characteristics of money market, stock market and physical asset respectively, and is also an important influencing factor of timing decision of merger and acquisition of companies. The paper takes China listing corporation share acquisition in 2004-2012 as samples, uses multi-levels liquidity variables, combines the single variable differences-in-group analysis and multivariate regression research together to systematically analyze the mechanism and effect of liquidity on M&A mode and performance. The Study revealed that different liquidity levels have differentiated impacts on the characteristics of M&A and the performance; liquidity difference affects the decision of companies’ M&A mode and further influence the performance of M&A; at the same time, liquidity directly influence the performance of M&A; the liquidity of monetary market and stock market have positive effect on the performance of M&A, while the liquidity of individual shares has a negative effect on M&A performance.