Recent researches suggest that private benefits of control of managers are a key predictor of acquisition performance and that there exists a negative correlation between measures of private benefits and acquirer announcement returns. However, empirical evidence has not confirmed such a negative relationship. The study in this paper shows that this relationship between private benefits of control of managers and acquisition performance may depend on the level of government shareholding. The study is based on an analysis of a sample of 246 M&A events from the listed companies of Chinese state-controlled enterprises, during the period 2001-2006 and it reveals that, under a low level of government shareholding, private benefits of control are positively correlated with the performance of acquiring firm; but private benefits of control are negatively correlated with the performance of acquiring firm under high government shareholding. Results also indicate that the private benefits of control of managers are important determinants of the acquiring firm performance. These findings sharpen the current understanding of the relationship between private benefits of control of managers and acquiring firm performance.