The difference of local government competition level provides the “institutional arbitrage” opportunities and “resource synergy” space for enterprises of cross regional M&A. Based on the non-related M&A transaction data of A—share listed firms in China from 2007—2013, this paper theoretically analyzes and empirically tests the effect of the difference of government competition on the performance of cross regional M&A, and the mediation effect of the tax burden and financial subsidy income of enterprises. The study found that: the difference of government competition improves the performance of cross regional M&A. In addition, the tax burden and the financial subsidy income of enterprises have partial mediation effect on the relationship between the difference of government competition and performance of cross regional M&A. Therefore, the central government should further expand and optimize the autonomy of the local government in terms of tax competition and fiscal expenditure competition, and the enterprises of cross regional M&A should pay attention to both tax coordination and regional industry synergies.