The Study On The Choice Of Financing For Chinese Private Enterprise Among Merger&Acquisition

Development of private economy and private enterprise is the pillar of our socialist market economy system. After30years’development, the whole country needs more and more resources from the out side world by mergers and acquisitions, especially, at the moment that the western countries are struggled in debt quagmire during the financial crisis. From the national level, numbers of mergers and acquisitions could help the economic power of the nation go beyond them, and acquire the upgrade of economic scale and quality. From the enterprise level, enterprises are given opportunities to buy other ones which could have some core competitive power or complementary qualities at a more reasonable price.However, for mergers and acquisitions, when the target company was determined, the focus will be the ability to have sufficient funds to complete the transaction, a reasonable choice of financing is directly related to the success of mergers and acquisitions. As China’s capital market development started late, development was not sufficient, especially in terms of financing for private enterprise, there are constraints imposed because of their identity, so the study of the acquisition financing of private enterprises is particularly important.This paper starts study on private enterprise’s financing in M&A process with recollecting the private enterprise history and describing today’s financing problem. The theory frame consists of the basic concepts such as mergers, acquisitions, stage of merger, managerial financing, financing for M&A, the research comments of scholars from the western countries and China, the forms of financing for M&A, and the choosing of which form for private enterprise.When the author writes the choosing of financing for M&A, there are not particularly difference in financing methods between private and nation-owned enterprise, because those methods have been valid for centuries in the world, and always been efficient. The analysis of the options for private enterprise focuses the effects of the consequence, the difficulties and the Chinese characteristic methods. In the last part of the paper, the author makes two sorts of suggestions which from angles of private enterprise and the other organizations. To optimize the methods of financing for M&A needs not only upgrading the private enterprise management, but strengthening the legal system, financial organizations and the financing platform.