Research On M&A Pricing Strategies And Implementation Mechanism On The Basis Of Game Theory

With the rapid development of our national economy, M&A actions play the more importantrole on the aspects of expanding productivity, improving operational efficiency and the marketcompetitiveness. To get the goals, the merger needs to consider the influence of many factors, such asthe actual situations of the enterprises and decisions' restrictions of the merger, and makes decisionsto realize the M&A target and maximize its own income on the basis of the characteristics of variousM&A actions.According to the problem of current M&A research problems, such as limited rationality ofM&A participants and asymmetric information in the decision-making process, the article studiesthese problems by using the game theory and information economics etc. and investigates themerger's optimal actions on the aspects of negotiations about pricing, payment and integration ofM&A from the viewpoint of the merger. Later the article provides the relevant solutions. At last, thearticle studies the conditions under which the merger can take actions to affect the industry chain andcreate a better atmosphere to its M&A actions.The main study contents include five parts:(1)The paper, based on the framework involving bounded rationality and asymmetric information,introduces the theory of learning in games and then creates an enterprise's M&A pricing modelfeatured by risk of breakdown and of limited rounds' duration. And it analysises from the point of themerger and discusses the main factors which affect its optional decisions and the correspondingmeasures. The result shows that the optimal use of the optimal operational actions of the merger areclosely related to the possibility of being observed of its optimal operational effectiveness and theattitude of the target enterprise to the assessment of the risks. So the merger can exercise pressure onthe target enterprise and attempt to force it to make concession through the manipulation of the targetenterprise's cognitive which relates to the risk of breakdown of negotiations and maximize themerger's expected return..(2)This paper uses learning theory of game to establish a model to analysis payment method inM&A actions on the condition of debt-to-equity swap, based on the framework involving boundedrationality and asymmetric information. It can be seen from the newly-developed model that themerger can affect and control the judgments of outside investors and target enterprise which relate tothe risk of breakdown. At the same time, the merger should control the rate of the proportion of equity financing and the rate of debt to equity. In this way, the merger can pay the M&A transaction by usingthese features to get its own optimal interest in the negotiations.(3)The goal of M&A to an enterprise is to maxmize its profit by optimizing and using all theresources in the course og M&A intergration.So the earnings in the market becomes an importantindex to its M&A performance.The paper uses the theory of stochastic evolutionary dynamics toanalysis the realization of M&A performance.The result shows that on the background of limitedscale of the merger and the target market, the merger can support the use of lower price and lower coststrategies and keep the scope of the changes about the difference among the costs under differentstrategies in a certain range by the intergration of resources. In this way it can not only mixmize thepressures which come from its competitors, but also decrease the resistence from the target market.Atthe same time, it can speed up the pace to access to realize its strategic goals.(4)The article thinks of the industrial chain as a vertical chain which consists channels whichtransmit resources and the influence of M&A actions to the industrial channel as the chain reaction ofthe merger and other enterprises on the industrial channel. And the article analysises the impact ofM&A actions to the industrial chain by using game theory from the viewpoint and puts forward usefuladvices on the background of asymmetric information and bounded rationality. The result shows thatthe actions of M&A only influence the number of the merger's upstream enterprises and the strategiesof the merger's peer enterprises. And the average level the optimal actions' result of the merger hasclose relationship with the following factors: the total value of the industrial channel, the merger's theoriginal share of the industrial chain and additional fixed cost which uses in the aspects of usingchannels to transmit resources. The merger can take effective actions to own beneficial transmissionchannels by making the number of additional fixed cost less than twice the product which multipliedby the total value of the industrial channel and the merger's the original share of the industrial chain.These actions also can prevent the action of other enterprises and accelerate their strategiesconversion to reduce the resistance from other enterprises of the industrial chain and realize themerger's strategic goals.