A Study On The Payment Method Of Chinese Enterprises Mergers And Acquisitions

Due to the impact of the global economic crisis, economic growth in Europe and America arelake of motivation, and the growth of China’s economy is slowing down obviously. This posed a newchallenge to the development of various industries, but also provided an opportunity to optimize theindustrial structure, and promoted industrial upgrading. With the deepening of China’s reform anddevelopment, the completion of non-tradable shares’ reformation and the continuous improvement onM&A related laws and regulations, the manner of M&A is increasingly becoming an important way forenterprise to expand the scale, gain competitive advantages and achieve the complementary advantages.Compared with the centurial development process of M&A in western countries, it started late for Chineseenterprises. This caused the shortage of payment method and theoretical study on the payment method for along time. Due to the difference of institutions’ system at home and abroad, we cannot completely copy thepayment theory of M&A which is relatively mature in western countries. Therefore it has great significanceto research the selection on the payment method of Chinese enterprises M&A.This paper analyzed the main factors that affect the selection on payment method, the pros andcons of payment method, the cost of M&A, which is based on the theory of synergy effects and life cycle.Thus, this formed a relatively comprehensive analysis system of payment method option. The researchbases on the case of the listed company M merger Company N, and then analyses the existing problems anddevelopment planning in their development. In order to seize the golden period of development firmly inthe display industry, both sides have formulated the strategic development plan of vertical integration. Theyhope to improve the ability to resist risks and achieve synergies through the manner of M&A. After bothsides reached a merger intention, this paper arrived at the stock payment which is a desirable paymentmethod, and then prove whether the stock payment is reasonable or not from the sides of the pros and consof payment method and the cost of payment method. Finally, to solve the disadvantages of complicatedprocedures and taking a long time caused by stock payment, this paper designs the most optimal programof M&A payment through the use of merger policy. The optimal payment method is stock issue withraising assorted funds. Through the study of this case, the two main conclusions are as follows. Firstly, M&A objectives,financial situation and tax factors have significant influence on the selection of payment method for thelisted companies. Secondly, the stock issue with raising assorted funds’ mode is more suitable for industrieswith good prospects and the purpose of strategic M&A. This method of payment is helpful to improve theefficiency of M&A.