Corporate Merger And Acquisition Mechanism And Government Policy

The paper discusses the mechanism and policy of corporate M&A(merger and acquisition). Based on the modem westem economic theories, such as new system economics, industry economics and investment theories, the author has explained corporate M&A in terms of economics and thus formulated a framework for theoretical analysis of corporate M&A. Using this framework, the paper has described the process of corporate M&A in China, prognosticated its tendency and proposed some policies for this matter. The paper comprises four sections. In the first section, the author reviews and evaluates basic theories and research in the field of corporate M&A. Adopting the methods of cost comparison and cost-effective analysis, the author sets up an assumption of omparative advantage?in corporate M&A. This assumption takes corporate M&A as an investment. Compared with other means of investments, corporate M&A is advantageous in that it saves cost comparatively and produces comprehensive benefit. In the second section, the author, using the methods from systems theories, analyses corporate M&A system with its open and dynamic characteristics and sets up a framework for theoretical analysis of corporate M&A. The objective, activity, technology and system are the four basic elements in corporate M&A. They are interrelated and work reciprocally and formulate a structural model in corporate M&A with objective in its core. The successful restructure in organization and blending in culture are the key factors in the success of corporate M&A. The organization restructure and culture blending work together with the structure model and form a complete operation system. This system keeps a dynamic balance between working condition and general condition when they work and influence each other. The framework for theoretical analysis of corporate M&A offers theoretical support in analyzing the operation in corporate M&A. In the third section, by a thorough analysis of the four elements (the objective, activity, technology and system) in corporate M&A, their restructures and culture blending, the author discusses the operation system and law in corporate M&A and proposes a basic model for the operation system in corporate M&A. In the fourth section, within the analytical framework in corporate M&A theories, the author reviews the history of the development in corporate M&A both in China and other countries and reveals the inner operation system and law in corporate M&A. Based on the analysis, the author advances some suggestions about the policy to better corporate M&A in China. The suggestions include having a good understanding of the matter so as to promote corporate M&A in China, setting up a long-term objective and regulating the process of activities in corporate M&A, adopting modem technology in the process of corporate M&A, making some renovation in business system and performing project management in corporate M&A, bettering government administration and creating a legal condition and general working condition favourable for corporate M&A.