An Empirical Study On The Characteristics Of M&A Target Companies In China

With the the continuous development and improvement of China’s capital market system, as one of the important ways to optimize resource allocation, mergers and acquisitions activity in China’s current economic development plays a decisive role. While learning about the mergers and acquisitions of listed companies, choosing target company is the first job of M&A,characteristics of M&A target company has become the focus of attention. Therefore, this analysis come to M&A target company characteristics and prediction model has a certain practical significance.Above all, complexing the objective of the study firm characteristics related theories is aimed to do further acquisition motivation theory analysis, trying to find the corresponding characteristics of the acquired company and motivation.Being based on the acquiree perspective to do an empirical study about the characteristics of the mergers and acquisitions target companies,and to help them select the right target company. Firstly, analyzing the impact of the acquisition motivation theory of mergers and acquisitions activities to set the assumptions with the combination of the characteristics of China’s capital market system, such as management efficiency assumption, growth-resources imbalance assumption,financial leverage assumption, undervalued assumption,ownership structure assumption,transaction costs assumption. A-share market listed company of mergers and acquisitions activity in China from2009to2011is selected as the target sample,ultimately determine the46samples, and select46compared samples of similar listed company which mergers and acquisitions events did not occur in the same industry totally92samples. Selecting the32financial indicators to measure acquisition targets enterprise features,such as profitability, solvency, cash flow capacity, operating capacity, development capacity, enterprise value, transaction costs, shareholders’ profitability, equity structure.Combining methods of significance testing analysis, factor analysis and logistic regression analysis to study the characteristics of the M&A target companies. According to the above analysis methods derived based on explanatory variables of the representative of the target firm’s characteristics to establish the selection model of the target company, and the test results of the model show high accuracy. The conclusion is that the present stage of Listed Company Merger in China show the tendency of the speculative bubble,management efficiency, low growth-low resource,high financial leverage is the the most important salient features in China’s securities market between target enterprises and non-target enterprises.