affect
Based on the general theory of M&A incentive, this paper puts forward many specific driving factors of M&A effect. Mainly includes:
(1) Weston synergistic effect
According to this theory, M&A will improve the production and operation efficiency of enterprises, and the most obvious effect is the realization of economies of scale, which is commonly called 1+ 1 > 2 effect.
⑵ Market share effect can improve the ability of enterprises to control the market through mergers and acquisitions. Through horizontal mergers and acquisitions, we can achieve the minimum scale of industry, improve the industry structure, improve the industry concentration, and keep the enterprises in the industry at a high profit rate; Vertical merger and acquisition is to control competitors' activities by controlling raw materials and sales channels; The influence of mixed mergers and acquisitions on market forces is achieved through indirect means. The absolute scale and sufficient financial resources after the merger and acquisition of enterprises pose a greater competitive threat to enterprises in related fields.
⑶ Empirical cost curve effect
Experience includes expertise in technology, market, patents, products, management and corporate culture. Because experience cannot be copied, the experience of the target enterprise can be shared through mergers and acquisitions, which can reduce the learning cost paid by enterprises for accumulating experience and save the development cost of enterprises. In some enterprises that require higher quality of labor force, experience is often an effective entry threshold.
(4) Financial cooperation with M&A will bring financial benefits to enterprises. This kind of interest is a monetary interest due to the role of tax law, accounting practices and internal regulations of securities trading. There are mainly tax effects, that is, reasonable tax avoidance can be realized through M&A, and there is also the stock price expectation effect, that is, M&A will change the stock valuation of enterprises in the stock market, thus affecting the stock price. The acquirer can choose the enterprise with lower P/E ratio and price income but higher earnings per share as the M&A target.
ordinary
There are two direct motives for enterprise merger and acquisition: one is to maximize the market value of shares held by existing shareholders; The second is to maximize the wealth of existing managers. Increasing enterprise value is fundamental to achieving these two goals, and the general motivation of enterprise mergers and acquisitions is reflected in the following aspects:
(1) Gain strategic opportunities
One of M&A's motives is to buy future development opportunities. When an enterprise decides to expand its business in a specific industry, an important strategy is to acquire the existing enterprises in the industry, rather than relying on its own internal development. The reasons are as follows: first, the time advantage is gained by the development and research department directly in operation, which avoids the delay of factory construction; Reduce a competitor and gain its position in the industry directly. Another strategic motive of enterprise M&A is to use market forces. If the two companies adopt a unified price policy, they can get higher income than when they compete. Many information resources may be used to disclose strategic opportunities and accounting information may play a key role. For example, accounting income data can be used to evaluate the profitability of various enterprises in the industry. It can be used to evaluate the change of industry profitability, which is of great significance to enterprise mergers and acquisitions.
(2) Play a synergistic effect.
Mainly from the following fields: in the production field, it can produce economies of scale, accept new technologies, reduce the possibility of supply shortage, and make full use of idle production capacity; In the field of market and distribution, it can also produce economies of scale, which is a way to enter new markets, expand existing distribution networks and increase product market control; In the financial field, make full use of unused tax incentives and develop unused debt capacity; In the field of personnel, absorb key management skills and integrate various R&D departments.
⑶ Improve management efficiency.
One is that the operation of enterprise managers is not standardized. When they are acquired by more efficient enterprises, they will replace managers and improve management efficiency. When managers' own interests are better coordinated with those of existing shareholders, management efficiency can be improved. If leveraged buyout is adopted, the wealth composition of existing managers depends on the financial success of the enterprise. At this point, managers concentrate on maximizing the market value of enterprises. In addition, if an enterprise merges with another enterprise and then sells some assets to recover all the purchase value, the remaining assets will be obtained at zero cost, so that the enterprise can benefit from the capital market.
(4) The economies of scale of enterprises that have obtained economies of scale are composed of two levels: production economies of scale and management economies of scale. Economies of scale of production mainly include: enterprises supplement and adjust production capital through mergers and acquisitions to meet the requirements of economies of scale, and implement specialized production in subsidiaries while maintaining the overall product structure unchanged. Management economies of scale are mainly manifested in: because the management cost can be shared in a wider range, the management cost per unit product is greatly reduced. We can concentrate manpower, material resources and financial resources to develop new technologies and new products.
5] Buy a shell and go public.
The approval of listed companies in China is strict, and listing qualification is also a resource. Some mergers and acquisitions are aimed at obtaining the listing qualification of the target enterprise, not the target enterprise itself. By buying shells and listing abroad, enterprises can raise funds abroad and enter foreign markets. China Ocean Shipping Group has successfully listed overseas for many times, holding Hongkong COSCO Pacific and COSCO International. COSCO Group (Shanghai) Real Estate Development Co., Ltd. spent 65.438+0.45 billion yuan to purchase legal person shares of Shanghai Zhongcheng Industrial Co., Ltd., accounting for 28.7% of the shares, in order to achieve the purpose of holding shares and successfully enter the domestic capital operation market.
In addition, mergers and acquisitions have reduced barriers to entering new industries and new markets. For example, in order to expand its business and occupy the Shanghai market, Hengtong bought the state-owned equity of Shanghai Lingguang Industry at a lower price through an agreement to achieve the holding purpose and make its business develop smoothly in Shanghai; You can also use the resources of the acquired party, including preferential policies enjoyed by equipment, personnel and target enterprises; Due to the pressure of market competition, enterprises need to constantly strengthen their competitiveness, open up new business areas and reduce business risks.
As the internal motive force and external pressure of its development, enterprise merger and acquisition mainly plays the following roles: (1) the overall benefit of the enterprise exceeds the sum of the benefits of the two independent enterprises before merger and acquisition; Due to the concept of tax law and investment securities market, a kind of fiscal synergy appears in pure monetary income and expenditure; It can realize the development strategy such as the transfer of the main business of the enterprise. Successful mergers and acquisitions can enliven some listed companies and non-listed companies, help improve the overall quality of listed companies, and expand the radiation of the securities market to all enterprises and the overall economy; Enterprise merger and acquisition can strengthen the market awareness of the government and entrepreneurs, clarify the responsibilities of both parties, and give full play to the initiative of both parties, so as to truly separate government from enterprises; Mergers and acquisitions create profit opportunities for investors and activate the securities market; It is conducive to adjusting the industrial structure, optimizing the allocation of resources and changing the mode of economic growth.
Financial motive
In the west, there are various theoretical explanations for enterprise mergers and acquisitions. Some theories believe that effective M&A financial activities can improve efficiency and may produce extraordinary returns. From the signal analysis of the securities market, some people think that stock acquisition will convey the information that the target company is undervalued, thus causing the stock of the acquirer and the target company to rise. Based on various theories, the flow of enterprise property rights in buying and selling follows the laws of value, supply and demand and competition, so that the factors of production flow to the fields and industries that are most needed and can produce benefits, and at the same time, the benefits brought by a pure currency due to the internal laws of taxation, accounting practice and securities trading should be considered. Therefore, the financial motivation of enterprise property right M&A includes the following aspects.
First, tax avoidance factors.
Because the tax rates of dividend income, interest income, operating income and capital income are quite different, appropriate financial treatment methods can realize reasonable tax avoidance in mergers and acquisitions. The deferred loss clause is stipulated in the tax law. Companies with large profits tend to target those with considerable accumulated losses, and tax revenue can increase the value of enterprises as an increase in cash inflows. The surplus of enterprise cash flow can be used in the following ways: issuing additional dividends, investing in securities, repurchasing stocks and acquiring other enterprises. If dividends are paid, the income tax paid by shareholders is higher than the securities transaction tax paid by mergers and acquisitions in the enterprise securities market; The yield of securities is not high; Buying back shares can easily improve the stock market and increase costs. The acquisition of enterprises with extra funds will produce certain tax benefits for enterprises and shareholders. In the acquisition of securities transactions. The acquisition company receives neither cash nor capital gains, so this process is tax-free. Through the flow and transfer of assets, enterprises enable asset owners to achieve the purpose of additional investment and asset diversification. M&A exchanges shares of the target enterprise by issuing convertible bonds, which are converted into shares after a period of time. In this way, the interest on issuing bonds can be deducted from the income first, and then the income tax can be calculated with the deducted surplus. On the other hand, enterprises can keep the capital gains of these bonds until they are converted into stocks, and the deferred payment of capital gains can make enterprises pay less capital gains tax.
Second, financing.
Merger and acquisition (M&A) of enterprises with large capital surplus but low stock market price can obtain their capital at the same time to make up for their capital shortage. Financing is a difficult problem faced by fast-growing enterprises, and trying to unite a well-funded enterprise is an effective solution. Because the replacement cost of assets is usually higher than its market price, enterprises are keen to acquire other enterprises rather than replace assets in mergers and acquisitions. Under the condition of efficient market, the economic value of enterprises is reflected by the market value based on the profitability of enterprises rather than the book value. The asset sale value of the merged enterprise is often low, the management efficiency of the enterprise is improved after the merger, and the related expenses are reduced by the reorganization of functional departments, which are all favorable conditions for M&A financing. At present, many state-owned enterprises urgently need a lot of development funds to implement technological transformation, so they adopt the form of property rights flow, reorganize their assets in different ways, revitalize their stocks to reduce investment and quickly form new productive forces. For example, Shanghai Industrial Holdings Co., Ltd., registered and listed in Hong Kong, invested 60 million yuan to acquire Shanghai Fei Xia Daily Chemical Company, which explored a new way for China enterprises to indirectly develop domestic brands by using foreign capital. Although Fei Xia has the advantages of well-known trademarks, its development is still slow due to lack of funds. After M&A, companies registered in Hong Kong are used as a way of overseas financing.
Third, the added value of enterprises.
Under normal circumstances, the P/E ratio of the stock of the acquired enterprise is lower than that of the acquirer, which makes the P/E ratio remain at a high level after the merger. The rise of share price has improved earnings per share and increased the wealth value of shareholders. Therefore, after M&A, the absolute scale and relative scale of the enterprise have been expanded, and the ability to control the cost and price, production technology, sources of funds and customers' purchasing behavior has been enhanced, which can reduce the risk of the enterprise and improve the safety level and total profit of the enterprise in the case of sudden market changes. At the same time, the credit rating of enterprises rises and the financing cost falls, which is reflected in the securities market, making the stock prices of both parties to the transaction rise and the enterprise value increase, resulting in financial expectation effect.
Fourth, enter the capital market.
The reform of China's financial system and the strengthening of international economic integration have greatly expanded the channels of financing from the securities market and the international financial market. Many companies with good performance often invest in the direction of capital operation and seek mergers and acquisitions in order to strengthen their own strength.
Verb (short for verb) speculation
Unproductive income from securities trading, accounting treatment and tax treatment of enterprise merger and acquisition can improve the financial situation of enterprises and encourage speculation at the same time. Speculation is increasing in China's foreign mergers and acquisitions. They buy the equity of the target company through a large amount of debt in the stock market, then sell some assets, and then rectify the target company and sell it at a high price, making full use of the undervalued assets to obtain the income from mergers and acquisitions.
Financial expectation effect of intransitive verbs
Because the stock market has changed the evaluation of enterprise stocks in the process of mergers and acquisitions, thus affecting stock prices and becoming the basis of stock speculation, thus promoting mergers and acquisitions. Generally, the stock price will not change much in a short time. Only when the P/E ratio or profit growth rate of an enterprise is greatly improved will the price-income ratio be improved. However, once there is a merger, the market's evaluation of the company will lead to an increase in the share prices of both parties. Enterprises can improve their earnings per share by merging enterprises with lower P/E ratio but higher earnings per share, so as to keep the share price rising. In the M&A craze in the United States, the expected effect makes M&A often accompanied by speculation and sharp fluctuations in stock prices.
Seven, the pursuit of profit
The realization of enterprise profits depends on the market. Only when the goods and services provided by enterprises are accepted by customers in the market and converted into money can profits be truly realized. What is associated with profit maximization must be the maximization of market share of enterprises with market maximization. Due to the development of internationalization of production, market and capital, the market of some industries is expanding day by day, so enterprises in these industries should be merged to meet the challenge of international open market.