Analysis Of M&A Premium Under The Background Of Gradually Loosening Entry Regulation In Transition Period

As we know, it has been 30 years from China Reforming and Opening Up. Along with unceasingly deepening reform of China economic system, Both private enterprises and multinational corporation are eagerly entering domestic emerging market through the merger & acquisition (M & A) way, which is displaying the most imposing prospect in transition period. Comparing with the Sells Cheap of national enterprises and the controversy of state asset outflow, we found that the M & A premium phenomenon frequently arise in the regulated industries. Based on our carefully looking back upon existing research on M & A premium, we regrettably found the research model of Motive-Premium in the economics circles cannot correctly explain what are happening in China transformation period. We think this mainly because of the differences between the west mature market economic system and our transition economics system.This article firstly looked carefully back upon entry regulation theory, and then explained the entry regulation which is gradually loosened by making use of the learning type of economic transition and relative theories. Simultaneously further analyzed the feasibility of this research. Under this background, we put the emphasis on the three foundation models and four expansion models which were developed from Cournot Model and Stackelberg Model. From what has been mentioned above, we expected to come to corresponding conclusions. Finally we took an example that occurred in China banking industry to confirm our conclusions.Overall, the following are this article main conclusions summary. First, the learning type of China economic transition has decided the gradual reform of entry regulation. Second, entry regulation and monopoly market structure promoted each other and has maintained the high profits together. Third, high potential profits and the institution guarantee of loosening entry regulation attracted large number of potential entrants. But it was not an easy thing to enter a new industry because of the obstacles that were set up by incumbent firms. Therefore, the potential entrants had motive to enter through M & A way and were willing to pay the premium for this. Certainly, entered more early, paid the premium level was also higher. Fourth, it always was a seductive way to enter through M & A premium, which could effectively reduce the entry regulation. Firth, the case analysis indicated M & A that occurred in China transformation period were largely affected by Non-Marketing factors.It was not easy to hold all the characteristics of China economic transition, which caused limits to our research. Although there are many factors to effect M & A premium, this article has no doubt to bring us a new research vision. It is necessary to comprehensively analysis many other industries which are obviously loosening entry regulation on the next research step.