Financial Reflection On M&A Among Chinese Enterprises

In this paper the author adopts normative approach and empirical analysis to elaborate on such issues as the motives behind M&A, the asset evaluation of target firms and the post-merger performance in the hope of providing guidance for corporate to make decision regarding M&A, and for government departments concerned to set relevant policies, as well as promoting acts of M&A among Chinese enterprises. The author points out: the fundamental goal of M&A is to maximize the value of corporate combination; the motive behind M&A and the corporate evaluation have a role to play in post-merger performance, hence affecting the fulfillment of the ultimate goal; it is beyond the reach of any single motive theory of M&A to interpret all acts of M&A ; environment factors play a role in the motive of a specific act of M&A. What motivates M&A of Chinese enterprises is strongly characterized by pragmatism, lack of vision, blindness and administrative interference, diverging from the fundamental goal of M&A; corporate evaluation has a profound impact on fixing the acquisition price and the post-merge performance. However, asset evaluation in China is far from standard, leaving much room for improvement; the post-merger performance of listed companies in China shows a tendency of going up in the beginning but experiencing a downturn in the ensuing years, the post-merger performance varies from one type of M&A to another. On thegrounds of the above analysis, the author proposes: improving environment factors contributing to the motive of M&A among Chinese enterprises; reinforcing and rationalizing the motive of M&A; standardizing the asset evaluation system; perfecting China's securities market and strengthening the regulation of state-owned assets.