Research Of Competiveness Of Trust Played In M&A

ABSTRACT:Mergers and acquisitions (M&A) is an important way that allocating resources in a transitional economy. It plays a critical role in improving industrial concentration and enhancing the activity of market economy. It’s widely used by China’s enterprises to enhance the competitiveness and open the oversea markets. China’s economy will rush into a wave of M&A. The existing literature on mergers and acquisitions is mostly focused on post-merger integration, payment and post-merger performance and so on. However, financing capability is somewhat be neglected. The success of M&A requires significant financial support. In China, many enterprises claimed the failure of M&A due to fund shortage. Financing bottleneck faced by enterprises is partly because of their own reasons, but also be affected by China’s financing channels for enterprises. Under our current financial environment, enterprises generally face financing problem, not even to say M&A financing which not only needs to consider the M&A financing scale, but also the financing period, costs and so on. Since2007, trust industry began to develop fast with the promulgation of two new regulations. Gradually, trust companies started their business in M&A field. Based on the advantages of "Mixed operation in capital market, money market and industry market" and huge trust capital scale, trust companies began to play an important role in M&A activities. The paper adopts comparative analysis method to research the competitiveness of trust financing mode. The paper makes a comparison of trust financing, M&A bank loans, bond financing and equity financing, and also makes a deep analysis of cases under the four different financing modes. The key objective of this paper is to solve the financing problem which our companies faced, and then make a contribution to our market activity. Case study is partly based on sorting scoring method. By the designed indicators, this part gives each financing mode a score according to its competitiveness, finally makes a comprehension of the scores. It comes to the conclusion that trust financing has certain advantages in M&A, especially in the aspects of collateral flexibility, issue fee, hiding M&A activities.