A Research On Financing Modes In M&A

Nowadays, the trend of the global economy integration has been deeplystrengthened, people at all levels have drawn more attention on the enterprise mergers&acquisition, since it’s a kind of effective means to expand market share, developscale production and optimize enterprise capital structure. The merging andacquisition of enterprise is a complicated and systematic process. As a part ofexecution procedure, corporate financing is the most important one during suchprocess, which has surpassed the enterprise development tactic consideration,therefore uplifting to such a high level to the development strategy. Among them, thechoice of M&A financing mode is the key to M&A financing decision. This articlefocuses on this subject, hoping to find out the problems in China’s M&A financingmode choice, and to propose appropriate countermeasures.Firstly, by reading literature, the acquisition financing related concept, thecommon modes, are summarized. Also influencing factors and the steps of theacquisition financing are reviewed. Then using statistical and metrological means, allthe2010mergers and acquisitions practice are analyzed, coming to conclusion thatthe choice of M&A financing modes in China do have problems, and the reasons areanalyzed. Finally, by the method of normative analysis recommendations on theoptimization of the acquisition financing modes in China are made through threeaspects.By studying we find that the decisions of the M&A financing mode made bycorporations in China is not consistent with Pecking Order theory. After analyzing, weget the points that it is because corporate governance in China is imperfect, resultingthat the largest shareholder lowers the dividends deliberately by controlling thedividend distribution policy. It also reflects that China’s bond markets areunderdeveloped, and acquisition financing channels are unitary. At the same time theapplication of mixed M&A mode of financing is primary.