| It is important to analyze the financial characteristics of M&A target companies in practice. Management may find the crisis of potential acquisition and be ready to defend beforehand. Accounting to these, management selected acquisition targets to accomplish their strategies. In the relevant researches, either domestic or international, a small portion of the literatures related to the forecast on M&A target companies, little from the view of financial characteristics. This paper is based on Motivations for Enterprise Merging and theory of target companies and makes empirical research on the financial characteristics of M&A target companies.This paper selects 34 target companies from pharmaceutical industry in which merger occurred in 2004 and 2005. In order to study effectively, this thesis selects 34 companies in which merger didn't occur to match according to size. From aspects of equity structure, investment value, solvency and profitability, this paper uses 16 financial indicators in match analysis and selects five financial indicators that distinguish target companies from non-target companies. On the basis of matching analysis this paper sets a logistic regression model about these five indicators and tests their forecasting ability. Through empirical analysis, this paper makes conclusions:The target company in China has the following characteristics. First, its equity is centralized, in other words, the first shareholder holds a high proportion. Second, the P/E ratio is low. Third, the debt ratio is high. Fourth, the ratio of operation profit to operation revenue is low. Five, the return on equity is low. The relationship on debt ratio is different from the prior researches abroad. One explanation is that it is related to China's special market environment.Based on these conclusions, this paper explains these five characteristics in china's market. This thesis specifies its limitations and directions for further study in the end. |
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