The Research About Exchange Ratio Of Merging & Acquisition

The development law of human socio-economic shows: the development of the productive forces must lead to the socialization of the production, while the socialization of the production is bond to cause the socialization of holding and using the means of production. The socialization of holding and using the means of production objectively requires expansion of the enterprise's scale. M&A is really a shortcut in the expansion of enterprise's scale. The more flourishing of the productive forces and the higher degree of the socialization of the production will both speed up the expansion of enterprise's scale and M&A. M&A is the inevitable product of the development of the productive forces.Since the 1990s, because of the quick development of the global economic, there arises a lot of M&A deals worldwide. These deals surprise us not only by their great amount and big scale, but also the complicated operational process. In china, M&A is a more difficult work. Because stock split always constrains the liquidity of the stock rights. The price's setting basis and forming mechanism are different between tradable shares and non-tradable shares. With the solving of the stock split problem, the motive mechanism of M&A has been improved and perfected. The industrial make-up is rationalized. These promote the expansion of high quality enterprise and the withdrawal of weak enterprise. We can say that M&A is the intrinsic needs of many enterprises. In order to growing quickly, obeying national resources strategic plan and facing pressure from international competition, Petro China, Sinopec, CNOOC, Lenovo etc has positively launched a series of overseas M&A businesses since 2006. It can be seen that after the stock split, China's M&A era has come.The methods of payment in M&A are not only cash, but also non-cash methods and methods combined of the two. For instance, they use stock, bond, stock&cash, bond&cash etc. Among these media of financing, Stock-for-stock merger has its unique characteristics. It uses convertible securities as the medium. So I believe that it will be use widely by China enterprises both in home and abroad. Exchange ratio is the most sensitive and important part in a Convertible M&A. Because the fixing of the ratio decides not only how the deal will be carrying out, but also influences the interests of both the bidder's and the target's shareholders. This paper aims to do researches on the exchange ratio by using convertible securities as the medium of exchange in corporate change-of-control transactions. For the sake of presenting a systematic study of the utilization of both the theories and techniques on Convertible M&A, I use quantitative analysis methods, qualitative analysis methods, basic theories combined with cases, mathematical models, graphs, tables etc in this article. At last, I conclude and analyze the subject in 5 aspects: 1. Measuring the agent of the M&A and choosing you medium of payment. 2. How to use the exchange ratio calculation model. 3. How to estimate the value of the corporations involved in the M&A. 4. Optimizing the exchange ratio and balancing the interests of the two sides. 5. The prospect of Stock-for-stock merger in China.