A Study On The Specially-motivated Merging And Acquisition Behaviors Of Chinese Private-owned Enterprises

In the progress of the globalization and information revolution, M&A reflects the global structural re-organization of enterprises led by the western economies. In our country, along with the economic reform, the M&A activities of private-owned enterprises become more and more important in the Chinese Property-Right markets. Because this kind of capital reshuffling (e.g. M&A) is in a developing and transitional economy, the M&A behavior has its own characteristics compared with that in mature economies. This paper aims to investigate the specially-motivated M&A behaviors of private-owned enterprises in the Chinese transitional economy. This paper utilizes the classical merging theory, and focuses on the special motivations of M&A behaviors in the Chinese transitional economy. First, the concept of the special motivation is defined from three special perspectives. Then, three main motivations are proposed for the private-owned enterprises: 1) eliminating the entrance barrier, 2) acquiring cheap government-owned assets in a big picture of 'government retreating, private-owned enterprises rallying', 3) entering the capital markets by 'buying a shell'. Based on these motivations, the merging methods, the disbursing methods and the merging risks are further discussed. Besides, the positive effects of the merging are also explained in this paper. Lastly, two cases are investigated to support the above-mentioned theories; and several foreseeable issues are studied. Practically and theoretically, this papers aims to improve and benefit the external trades of private-owned enterprises, and to help the policy-markers designing better institutions and systems.