What is M&A?

Mergers and acquisitions refer to two or more independent companies. Companies merge to form one enterprise, and usually one or more companies are absorbed by a dominant company.

M & A

(business activities)

In July 2012, China's M & A market completed 68 M & A transactions, of which 63 were disclosed, with a total transaction value of US $ 2.204 billion, with an average capital of approximately US $ 34.99 million per case. Compared with last month, the number of mergers and acquisitions is basically flat, and the market heat has not changed much. ^[1]

The most basic

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The first thing to consider is why am I doing this acquisition?

The second important factor is whether the management team can cooperate well?

The third is to pay attention to cultural differences in the process of mergers and acquisitions.

Chinese companies should learn from overseas mergers and acquisitions

After the merger and acquisition of enterprises, it can produce synergistic effects, can reasonably allocate resources, reduce internal competition and other advantages that are beneficial to the development of the enterprise, but there are also a lot of risks, especially

Successful mergers and acquisitions can bring great development to enterprises, but if mergers and acquisitions are hindered, they will also bring considerable losses to the enterprises. Enterprises should take corresponding measures to reduce the risk of mergers and acquisitions.

1. Understand the value and situation of the target company

Enterprises must be reasonably determined

According to the different functions of the merger or acquisition

Generally speaking, a company's mergers and acquisitions have to go through the four stages of preparatory stage, scheme design stage, negotiation signing and takeover integration. The following table:

Preparatory stage

The company formulates merger and acquisition strategies according to the requirements of the development strategy, and initially outlines the outline of the target enterprise to be merged, such as the industry, asset size, production capacity, technology level, market share, etc. Capturing M & A targets and making preliminary comparisons with alternative target companies.

Scheme design phase

The design phase of the plan is to conduct in-depth analysis of various materials based on the evaluation results, limited conditions (maximum payment costs, payment methods, etc.) and the target company's intentions, and consider all the considerations to design several merger and acquisition plans, including the scope of mergers and acquisitions (assets, debt, Contracts, customers, etc.), M & A procedures, payment costs, payment methods,

The first wave of mergers and acquisitions characterized by horizontal mergers and acquisitions

In the second half of the 19th century, great progress was made in science and technology, which greatly promoted the development of social productivity. It created conditions for large-scale mergers and acquisitions in industries such as railways, metallurgy, petrochemicals, and machinery. Many companies in various industries passed

Sina buys $ 1 billion

1. Efficiency theory

The theory of corporate mergers and acquisitions is as full of the pulse of the times as the practice of mergers and acquisitions. Traditional efficiency theory holds that mergers and acquisitions can improve the overall efficiency of the enterprise, that is, synergy

1. Agency cost theory

Owners of modern businesses with

1. M & A performance and methods. Regarding the performance of mergers and acquisitions, from the perspective of extraordinary returns, generally the acquiree

The current M & A and restructuring in China has a complicated approval process and the annexation of central enterprises

Wang Sihai, deputy director of the mergers and acquisitions department of a securities company, believes that from the perspective of China's market conditions, the mainstream of listed companies' M & A and restructuring markets is backdoor listing. M & A is even less.

Wang Sihai believes that from the experience of foreign capital market development, Wall Street mergers and acquisitions is a history of market-based mergers and acquisitions. ^[2]

In 2012, the scale of Chinese companies' acquisitions in the United States reached an annual record of about $ 10.5 billion, but in fact, China is cautious about engaging in acquisitions in the United States, and its ambitions for mergers and acquisitions in the United States are not as large as people think.

The scale of Chinese companies acquisitions in the United States this year has reached an annual record of about $ 10.5 billion, which is equivalent to the total of the previous four years, and higher than the total of Chinese companies transactions in Asia, Africa, the Middle East and Latin America this year. The scale of US Treasury bonds held by China in October decreased from the same period of the previous year, which also reflects a shift from the People's Bank of China to financing US deficits to purchase productive assets by Chinese companies.

In contrast, the scale of U.S. companies' acquisitions in China has fallen by about half from last year to about $ 5 billion, less than one-third of 2008 levels.

However, the most shocking statistics may also count on this: in terms of amount, the size of Chinese acquisitions in the United States accounts for only 1% of the total US M & A transactions. One reason may be that China is concerned that regulators such as the Committee on Foreign Investment will interfere in the transaction.

Another factor is that China's rapid economic growth can bring higher returns, although its growth has slowed recently. Deloitte's survey shows that the size of Chinese M & A in the United States may increase slightly next year, but it is unlikely to change significantly. ^[3]

When American electric car battery maker A123 Systems won federal grants in 2009, politicians from both parties were encouraged. But after a lapse of three years, the company filed for bankruptcy this year and became the prey acquired by the Chinese battery factory Wanxiang Company. Many members of Congress stated on the 10th that the acquisition of Chinese companies would threaten the national security of the United States.

The company's transfer auction was held secretly in Chicago last week, and was finally bought by Chinese auto parts maker Wanxiang Group for 260 million yuan, which immediately attracted close attention from Congress and the Obama administration. The Obama administration believes that the federal government has a say in the final ownership of A123 Systems. ^[4]

If 2013 is the first year of M & A in the A-share market, then 2014 can be called the year of blowout in the Chinese M & A market. In 2014, the macro environment was conducive to the mergers and acquisitions of listed companies, and listed companies actively used the advantages of A-share market financing for industrial mergers and acquisitions. Affected by frequent policies, accelerated reform of state-owned enterprises, and economic transformation and upgrading, the A-share M & A market has a blowout phenomenon in terms of both the number of transactions and the scale of transactions. The size of M & A funds has reached a historical record of 1.56 trillion yuan.

There were many reasons for M & A blowouts in the A-share market in 2014. In the context of economic transformation, industry integration is accelerating, the State Council policy encourages mergers and acquisitions and reorganizations, the Securities and Futures Commission actively revises and streamlines various mergers and acquisitions and reorganization policies, simplifies the approval process, greatly shortens the approval time, and increases the number of mergers and acquisitions restructuring tools. Increase the activity of corporate mergers and acquisitions and reorganization, making A shares in a period of high merger and acquisition restructuring. ^[5]