Research On Overseas M&A Pricing Of Chinese Enterprise

With the development of global economic integration, overseas mergers andacquisitions have become the primary overseas strategy. Compared to Western countries,Chinese enterprises overseas mergers and acquisitions started later, there are a lot ofproblems both in theory and in practice. In particular, M&A pricing issues is critical to thesuccess of overseas mergers and acquisitions. In this paper we will study Chineseenterprises’ overseas M&A pricing issue. M&A pricing includes the overseas targetcompany pricing and M&A transaction pricing, overseas target company pricing is willingto assess of the value of overseas target company, which is a static pricing process; M&Atransaction pricing is to determine the final price of M&A transactions, which is a processof dynamic pricingFirst, based on cross-border M&A theory, we summarized the existing research ofcross-border M&A theory and M&A pricing theory, and found that there are threeinsufficient points: domestic cross-border M&A research often from a single point of viewto analyze the M&A, and few studies on M&A motives’ influences; existing research paymore attention to enterprise motivation and influencing factors, while less research onempirical research pricing models and pricing methods; research on M&A pricing gametend to ignore the transaction costs and the external environment changes’ impaction, itmay lead the deviate from the final results with the facts.Second, from the M&A value theory, expected utility theory and the signaling gametheory, we analysis the cross-border mergers and acquisitions of enterprises pricing in aneconomic point of view. First based on the mature enterprise value theory, from theperspective of corporations merger and acquisition’ value motivations, we proposed of thespecial motivations of Chinese enterprises cross-border M&A; and then from theexpectations of utility theory perspective we analysis M&A pricing, we use the bargainingmodel of mergers and acquisitions to describe the impact of the ability on mergers andacquisitions, and illustrates the different risk preferences lead to different M&A optionsand results; Finally, from the perspective of M&A signaling game, we show the dynamic game process of target pricing.Then we qualitative analyze the four main factors of the Chinese enterprises overseasmergers and acquisitions pricing-the value of the target company, synergies, institutionalperspective, private equity. The value of the target company is the base of M&A pricing，which is the core factors affecting cross-border M&A pricing; Research on the twocountries institutional factors and private equity funds participation impaction on M&Apricing from the perspective of New Institutional Economics is the innovation of thispaper; private equity funds participating in overseas mergers and acquisitions brings thedifferent synergies and collaborative premium pricing from the traditional cross-bordermergers and acquisitions, therefore, private equity funds participating in overseas M&Awill impact the M&A pricing.Finally, we analyze the existing pricing theories and methods, and summarize theirstrengths and weaknesses, then we found that the only real option pricing method is amore comprehensive consideration of the uncertainty of the external environment and thestrategic value of mergers and acquisitions. We use the real options theory to analyze thestatic pricing progress of the value of the target company, combined with game theorybargaining theory for dynamic analysis of the M&A transaction price, and we build up theChinese enterprises’ overseas M&A pricing model. The model can be a reliable tool toresolve the pricing issue of Chinese enterprises overseas mergers and acquisitions.