A Study Of Enterprise Mergers And Acquisitions Financing Strategy

The main purpose of this paper is to help companies make appropriate Mergers & Acquisitions (M&A) financing strategies to accomplish the M&A with lower costs according to their own benefit requirement and the target company conditions. It includes how to set down the scale and term for the M&A financing, select payment ways and financing channels. When it comes to financing for M&A, the buyer should consider firstly by which channel it could probably get funds. After that, the funding cost of consideration should be taken into account. Therefore, this paper starts from researching the financing channels, then introduces the possibility of each channel, demonstrates the suitable conditions, operation procedures, merits and shortcomings with some case studies and then raises concrete operational suggestions. The author studies some special projects. These are, for instance, proprietary displacement and proprietary investment for internal financing, bond, trust and seller's credit for debt financing, stock exchange for equity financing and leverage buy-out for hybrid financing. Furthermore, based on the analysis above, the author analyzes factors affecting financing decisions and puts forward fundamental ways for M&A financing. In the end, the author demonstrates the whole operating procedures of the M&A financing ideas and ways with a real case in order to test and verify the view points mentioned above. The financing channels are limited due to financial environment restriction. However, it has extremely original creativity to analyze every feasible channel combined with the requirements of the target company to design financing plans and portfolios. That is also what this paper focuses on. Generally, it comes the paper's conclusion: Although the domestic financial market is not so perfect and there are not so much financing channels left for M & A activites, there exist a number of innovative tools to finance. Purchasing companies may choose optimum financing combinations after considering comprehensively all the factors affecting the decision-making process. They may turn to its internal resources as consideration for M&A at first. Then if it is still not enough, the company could finance externally, giving priority to the debt financing than equity financing.