A Study On The Strategy For Setting The Price And Financing Arrangement Of M&A In China

M&A is an efficient way to proceed expansion in the low cost, quickly strong and develop in the short term. With the development of economic globalization , M&A likes rising winds and surging clouds of wave tide. It becomes the inner motive and basic mechanism of adjusting the economic structure for all the countries. With China entry to WTO, it signs that China quickens the step of transition to market economy, for the enterprises, as the basic units in the market, it will adapt to the world standard producing and managing mode to develop , furthermore, with the reform of the state-owned enterprises, M&A will be popular in the capital market, and it will be a newly arisen power of adjusting the China economic structure.From the point of research, M&A is a complexity science. It concludes the property economics, finance theories, management etc. among them, financial analysis is through the whole process of M&A, it includes analyzing the whole process of M&A, setting the price for M&A, the financial position of the target enterprise, the financial evaluation etc. for the buyer enterprise, when it determines the target from the point of strategy and development, usually it will consider the two important issues: Setting the transaction price, and the financing of M&A, the two financial problems are relevant closely, the price for M&A transaction is the key factor for the financial arrangement. It will determine the scale of financing and the financial cost. Furthermore, the choices for financing of M&A will affect the strategy of setting the price, and the two issues are the key factors for the M&A efficiency and effect of M&A integration. Therefore, in the paper, the two issues will be discussed.Part I points out the limitation in setting the price for M&A and the present condition of financing of M&A, M&A in China is not established in the real market economy. It has not established the real property transaction market, and it still belongs to M&A in the not perfect capital market. Therefore, the deceitful reorganization in the short term is still popular in China M&A. In this way, it will affect the strategy in setting the price for M&A, and the financing of M&A. During the process of M&A, the buyer enterprise excessively entrust the target enterprise financial report, but it cannot publish all important information on time, sufficiently and completely, and the information asymmetry will affect the mechanism in setting the price, resulting in the M&A risk. In the process of M&A in China, it usually adopts with the clean property worth or the propertyreplacement cost adding method to evaluate the value of target enterprise, It emphasizes in the property but neglect the whole value of enterprise, and the profit ability, and it is unreasonable in setting the price. It cannot be neglected the transaction price in the process of arranging for financing of M&A. It is limited in the financial channel of M&A in China, listed companies mainly borrow money from the stock market, it has not gotten the leverage benefit, and it neglects the financing cost, thus weakening the efficiency of M&A.Part II. It gives the Game Theory analysis in setting the negotiation price, and gives the solution way. There are three aspects in setting the transition price strategy: setting the tallest price for the buyer enterprise; setting the lowest price for the target enterprise; proceeding the game for the two parities, and eventually setting the bargain price. There are several calculation methods for evaluating the value of target enterprise, for different methods fit with different M&A modes, etc. such as the cash discount method, PE method, etc. for setting the transition price. For the target enterprise, there are two ways to evaluate the value itself .i. it bankrupts ,then the method of calculating the asset can be used to determine the value of enterprise, ii. The target enterprise can continually operate, then there are many ways to calculate the value itself, finally , the Game Theory gives three models: Haggling mo...