The Research Of Merger And Acquisition With Misevaluation

Enterprise merger and Acquisition (M&A) is an main approach of capital aggregation and firm growth and has been an important form of capital movement in the modern market economy. Research on motivation of M&A is significative to investigate M&A and is crucial to explain the movement and forecast the trend of M&A. At present there is not a universal theorem to explain the motivation of M&A because of scholars' different angles of view and times. The value of firms is crucial to M&A especially for the listed enterprises.Thus it is reasonable and necessary to study M&A with the value of firms.We do some research on motivation of M&A with value basied on reading a mass of literature.For a targer firm, there maybe not only one acquirer and they offer by stating a fraction of the joint firm which they will give to the owners of the target firm.The target firm evalueate the offers based on the information of the market and his own and then decide which offer should be accepted by comparing the connotative value of the offers.The process is similar to the auction and so we study the value's effects on M&A by the second-price auction.The targer firm decides whether to accept a offer by valueating the synergies of the bidder and the value of synergies is the critical factor that affects the happen of M&A. The synergies relate with the true value of the firms which maybe not equal to the market value because of market inefficiency.The difference between market value and true value is called discrepancy which affects the synergies and movement of M&A.The common part of the discrepancy between the acquirer and target is called market discrepancy which is arosed by the market and the orther part is called firm-special discrepancy which relates with the character the firm alone.By analyzing the model,we find that market discrepancy and firm-special discrepancy of the acquirer have positive correlation with synergies.The more the firm-special discrepancy, the less value of synergies by the target.Though we think that M&A is more likely occur on overvalued market than undervalue market and overvalued firm is more likely to be the acquirer while undervalue is more likely to be the role of target.Our paper consists of five parts.In the first part we introduce the significance, background and actuality of research on M&A.In the second part,we summarize and sort the theorems of merger motivation on the basic of reading lots of literatures.In the third part which is the emphasis of this paper we analyze the effect of different errors on M&A and forecast the conditions of the occurance of the movement with the second-price auction.In the fourth part,we do an empirical resreach on M&A with current data in our country and test some conclusions above. In the last part we conclude this paper and point out the innovation and disadvantage of this article.