Integrated Management, Mergers And Acquisitions

Ⅰ.The significance of this thesisThis thesis is focused on the study of integration management theory and practices. Also, some problems incurred in the M&A (Merger and Acquisition) practice in China are identified. The purpose of this study is to provide a systematically structured procedure and advice to the Chinese companies which deal with integration problems after M&A.The reason why this topic is chosen is the fact that M&A operations have been increasing in China in the recent yeas. Take the information explosure in the stock market as an example. In China's A Stock Market, the first example of M&A was Hengtong Corp. Limited reorganized with Lingguang Stock Corporation in 1994. From 1997 on, M&A was becoming more and more popular, the ratio of restructured listed companies in A stock market was 7.71% in 1997, 17.33% in 1998, 19.84% in 1999 and 16.3% in the first 10 months of 2000. Through capital operating, some enterprises grew rapidly, such as Top Group. However , many enterprises have stumbled in M&A. It is reported that over half of M&A cases ended with failure, that is ,they didn't give any return to their stockholders. What is the problem? Why is the ratio of unsuccessful M&A so high? There are two reasons. firstly, improper strategic factors, such as too cost price, poor strategy of mergerer, or great differences of corporate cultures, could lead M&A to failure, this kind of unsuccessful M&A could be avoided if the feasibility study of integration has been done before M&A decisions. Secondly, integration mistakes could effects the result of M&A. This thesis is focused on integration management.Ⅱ.Outline and logic structure:According to M&A theory, there are three phases in M&A process: feasibility study, negotiation, and integration. According to the systematic perspective of integration, integration management will not start to operate after M&A decision is made, however, there are many works concerning integration before M&A decision, although integration actions could be adopted only after the mergerer enters mergeree's company. The layout of this paper is as follows: chapter one talks about relevant M&A theories and their effects on integration, chapter two discusses what should be done in feasibility study period and how to make integration strategy and integration plan. Chapter three introduces how to combine two companies into one. Chapter four discusses four problems that China's companies often encounter during integration process.Ⅲ.Content and viewpoint This paper is divided into four chapters Chapter One introduces relevant M&A theories and their effects on integration. This chapter contains two parts.First part begins with the definition of M&A and integration management. Integration management refers to those methods and practices in the integration process, in order to control integration cost and to achieve all the M&A expectations, including regular personal arrangements, institutional building, exfoliating useless assets and liabilities, restructuring operation and management functions of mergerer and mergeree's, integrating two kinds of corporate cultures into a new, more effective and efficient culture. Generally speaking, the whole integration management process of M&A could be divided into three phases: feasibility research, negotiation, and integration. These are the topics of chapter two, three and four. This part also introduces high ratio of unsuccessful M&A and analyses exact strategic and integration factors.Second part introduces three theories and their effects on integration. Firstly, strategy theory demands that the mergeree be useful for realization of the mergerer's strategy. Secondly, M&A form theory demands different degrees and paces of integration. Thirdly, company contract theory could make it easier to find key barriers and critical success factors of integration.Chapter two introduces integration feasibility and analysis, integration strategy and plan. It contains three parts.The first part is integrat...