What Are International Mergers and Acquisitions?

Cross-border mergers and acquisitions refer to the general name of cross-border mergers and acquisitions, and refer to the enterprises of one country (also known as mergers and acquisitions) in order to achieve certain goals, through certain channels and payment methods, All assets or shares sufficient to exercise operating activities are purchased, thereby implementing actual or complete control over the operations and management of enterprises in another country.

Cross-border M & A

Cross-border mergers and acquisitions are a form of capital export commonly used by multinational companies.

Since the 1990s, with the accelerated development of economic globalization, investment liberalization, and trade liberalization, cross-border mergers and acquisitions have entered an active period of vigorous development in countries around the world, and have had an inestimable impact on the world economy. However, due to information asymmetry and other reasons, companies often face various risks when conducting cross-border mergers and acquisitions, leading to the end of most cross-border mergers and acquisitions or failure of mergers and acquisitions. Among them, the legal risks caused by complicated cross-border M & A laws in various countries have an inestimable impact on enterprises. The first chapter first analyzes the connotation, extension and characteristics of cross-border mergers and acquisitions, and then defines the concept of cross-border mergers and acquisitions legal risk and analyzes different types of legal risks to determine the research scope of this paper. The second chapter analyzes the legal risks of target companies' anti-M & A. Anti-M & A measures increase the uncertain factors in the process of mergers and acquisitions, increase the merger and acquisition costs of mergers and acquisitions, and narrow the choice of merger and acquisition methods. The third chapter analyzes the legal risks of the host country. These include the host country's antitrust legal risks, the host company's corporate and securities law legal risks, foreign investment legal risks, and special legal risks. The fourth chapter analyzes specific measures to prevent and respond to legal risks of cross-border mergers and acquisitions. Based on the above analysis, the author proposes specific measures to prevent and respond to legal risks, such as prudent investigation, risk management, and merger and acquisition integration, from a legal perspective. In the end, the author discusses the legal risks of Chinese enterprises in overseas mergers and acquisitions and their countermeasures in combination with China's national conditions. Chinese enterprises wishing to conduct cross-border mergers and acquisitions should conduct a careful investigation of the target company before the merger and acquisition, and carefully evaluate possible legal risks; conduct risk management during the implementation of the merger and acquisition, and do a good job of integration after the merger and acquisition is completed. Enterprise mergers and acquisitions also play their due role.

Merger of Boeing and McDonnell Douglas

Boeing is the largest aircraft manufacturing company in the United States. It has gained about 64% of the world market and has gained a dominant position in the world's large passenger aircraft production market.

Although European and American

Overseas mergers and acquisitions can not be a great success, let alone look at short-term gains and losses. Greedy and Tu Kuai are misunderstandings repeatedly confirmed by many cases. From this perspective, some overseas mergers and acquisitions that seem to be successfully completed should be cut off from the outset. A typical case is the first cross-border merger and acquisition since the reform and opening up mentioned earlier-Shougang Group acquired the Peruvian iron ore company project. Due to lack of investigation, Shougang's price of US $ 120 million is far higher than the Peruvian government's benchmark and The bids of other competitors, plus the repayment of the principal and interest of the acquisition financing loan, made this project, which should have a surplus, difficult to make profit in the next ten years. Therefore, aside from the historical aura of "the first overseas M & A" and the "spirituality" of US $ 120 million that year, from an investment perspective, this investment should be an extremely failed M & A case.

So, is there a uniform standard for measuring the success of overseas mergers and acquisitions? the answer is negative. Because strictly speaking, every overseas M & A project is different from the purpose of the merger and acquisition, the transaction details, to the operation and integration of the target of the merger and acquisition after the completion of the merger and acquisition. However, although there is no uniform standard, there is no doubt that to measure the success of mergers and acquisitions, the rule of judgement should be directed more towards the conclusion of the merger agreement (of course, there are cases of "failure" when the merger agreement is reached, as in the above example of the unusually high merger price However, with the process of internationalization and the broadening of the horizons and experience of Chinese investors, there will be fewer and fewer "unfair" investors.)

For Chinese investors, the concept of successful overseas mergers and acquisitions should not be limited to whether the target of the merger and acquisition achieves asset appreciation and achieves specific financial operating indicators. It should also satisfy investors' original intentions and long-term strategic goals in the entire dynamic process. For example, in 2004, Lenovo Group [7.22-0.28%] acquired IBM s global PC business and a series of integration offensives after the acquisition, which not only increased the popularity of the Lenovo brand worldwide, but was also considered by professionals to be achieved through mergers and acquisitions. "Transfer of Intangible Resources." As Liu Chuanzhi, the president of Lenovo, said, Lenovo spent US $ 1.75 billion (including US $ 500 million in debt) to buy a "business that can solve its own problems", and satisfied its internationalization in human resources, corporate culture, and brand in a shorter time. Resources, research and development capabilities, customer relationships, complete channels, and supply chains. Although Lenovo experienced declining sales in the overseas market and more turbulent competition in the domestic market after this overseas merger and acquisition, these cannot constitute a reason to deny the overseas merger and acquisition. Another example is the acquisition of Volvo by Geely, which is frequently piled up by Yimei. For Geely, this seemingly unknown Chinese local private enterprise passed the acquisition of Volvo, which has an 82-year history and is known as "the safest car in the world". At the moment, it became famous, but, as the cool person analyzed, the difficulty of "snake swallowing the elephant" actually lies in "how to digest it after swallowing." Especially under the background that Volvo was facing losses at the time, brand reputation and market share were facing a downward trend, how to make it have sustainable profitability and ensure high-end brand status after the merger and acquisition, and how the two parties passed the country, brand, and technology after the merger and acquisition Gap, management level and other aspects, to achieve true integration and win-win situation, are all issues that Geely needs to consider. From the above perspective, it is too early to comment on this transaction as a successful classic less than two years after the completion of the acquisition.

Compared with the "success theory" of benevolent and benign, the method of judging whether an overseas M & A project is more cost-effective is to compare various costs (including risk factors) of the merger and acquisition with income. It should be noted that this method cannot be absolutely used to judge whether a certain overseas M & A project is "successful", because as mentioned above, Chinese investors may not always obtain "real money" that can be converted into a currency symbol. "There are many intangible resources that cannot be bought. However, the purpose of comparison is to be able to effectively identify some cases of significant imbalance between inputs and outputs and the irrational causes behind them. For example, in the financial crisis of 2008, many private entrepreneurs plunged overseas companies or assets at low prices out of a greedy and cheap mentality, but because of lack of clear M & A motivations and integration, operational capabilities, or the host country s Risks in environmental protection, labor, and other aspects are expected to be inadequate, thereby deepening the investment trap. A pile of seemingly "cheap" transactions led to endless troubles and investments. In the end, investors not only did not take advantage, but paid a heavy price.

Even for investors with M & A goals and knowledge, the specific integration strategies and integration costs adopted after the merger are different due to the specific M & A project. For example, some foreign scholars have proposed that, compared with the traditional integration strategy adopted by the acquired companies after the traditional multinational mergers and acquisitions, the new type of cross-border mergers and acquisitions should adopt a "partner strategy", that is, to retain the independence of the acquired enterprises and allow them to operate independently in order to gradually Way to achieve integration and win-win situation. Compared with the integration strategy that focuses on reducing costs as soon as possible and achieving resource integration, the partner strategy is more suitable for the acquiree who is complementary to the acquirer's resources and has better or unique resources (such as brands and technologies). In addition, one of the reasons that many acquisitions fail to achieve the expected goal is because the selected acquisition target is not consistent with the strategic purpose of the transaction. Specifically, the buyer did not figure out exactly what he wanted to buy. Cross-border mergers and acquisitions, which are packed with many complicated factors, make it easier for investors who are unknown to get lost. For example, investors who are also conducting overseas mergers and acquisitions for the purpose of improving the company's performance or reshaping the business model should adopt different specific measures in terms of selection of transaction objects, integration of the target company, and operations. It is possible to achieve the expected results. And if the acquirer does not clarify the purpose of the acquisition and clarify the value of the acquisition target, in all likelihood, improper integration or even merger failure.