Problems And Solutions Of The Merger And Acquisition Of Investment Banks In China

Merger and acquisition (hereafter referred to as M&A) is a way to reconstruct industrial structures so as to allocate resources properly. It is a necessity for the survival and development of enterprises under the market economy, and it is also an efficient way for the reform of property right systems of state-owned enterprises.As they push the M&A wave, investment banks have become the core of capital market. They have played very important roles in reorganizing production elements, optimizing resource allocation, financially supporting enterprises and promoting industrial development. In recent years, in the world market, investment banks have gradually involved with capital management in enterprises, and have become financial institutions which are specialized in enterprise merger, capital financing, assets reorganization, consultation for going public and agency businesses. Investment banks have been playing more and more important roles in the M&A of enterprises. In order to cultivate preponderant enterprises and realize optimal allocation of resources, it is urgent to study how investment banks in our county will function in the M&A of enterprises. It is also necessary to investigate the operation processes of the M&A of investment banks, including its sufficiency and obstacles, so as to promote the development of investment banks in China.The present study investigates the problems and solutions in the M&A of the investment banks in China. Firstly, we study the status in quo of the M&A in China and of the investment banks. We look at some cases of M&A in China so as to see the present situation of M&A in China's enterprises. The status of investment banks in the financial system and their importance in M&A are clarified. We focus on the internal constraints and the external obstacles of the development of investment banks in China, and then, by comparing these with the M&A operations in modern investment banks in the western world, we investigate the involvement of China's investment banks in M&A: their roles, problems and the reasons for the existence of these problems. We point out that the most prominent problems are: insufficient involvement in M&A, to much political involvement of the government, the restriction of human resources, the puniness of investment banks in China, the lack of competency and the inadequacy of sufficient financial support. Finally, we give some feasible suggestions to the function and efficiency of China's investment banks in M&A: to reform the present property right systems, to transform the government functions, to enhance the competency of investment banks in M&A, to enrich financial products in China, to break new financial channels, to unify the laws and regulations in the M&A among enterprises in China, and to amend and consummate the existing laws and regulations concerning M&A.