The Strategy Research On Merger And Acquisition Of The MC Company

Merger and acquisition is an important strategy for enterprises to expand their scale and improve the overall competitiveness.Enterprises which intend to expand by the way of merger and acquisition are facing the common issue:how to establish suitable merger and acquisition strategy and management mode for their long-term development.As a listed privately-owned medium and small sized enterprise, the MC company’s scale has been constantly enlarged and management performance has been sustainablypromoted through the financing platform of capital market. However, due to the oligopoly pattern formed by the industryof second power equipment but located in the second echelonin the industry, the MC company intends to form new point for increasing profits and keep the earnings with persistent and stable high level growthby merging with enterprises with better prospect, profitability and synergy.By reviewing the progress of merger and acquisition and in combination with the questionnaires and interviews, we find that there are several problems existing in merger and acquisition of the MC company:firstly, there are some problems existing in the implementation stage, including a lack of clear strategic planning and absence of advance planning about industry and scale of the acquisition targets before merger and acquisition; randomly selecting of acquisition target and the result comes from coincidence, no database of acquisition target has been established; the absence of risk control department and insufficient consciousness of investment risk prevention; the shortage reserve of dispatched personnel, part-time personnel are common and no full-time staff can be dispatched. Secondly, there are also some problems existing in the integration stage, including a lack of overall integration plan and the process of consolidation scattered disorderly; the absence of special management department and a failure of communication; poor awareness and low cooperation degree of integration in some departments.The acquisition targets should match with the MC company in strategy, scale and culture. Based on the company’s industry, financial and equity situation, conglomerate mergers and acquisitions is more suitable for the MC company in the present stage. Therefore, the selected industry should be attractive, promising and associated with the company’s industry, such as electric power primary equipment industry, the intelligent city related fields or military informatizationindustry.On the mode of M&A, acquisition of stock is more suitable to the MC company. On the payment of M&A, the MC company should choose cash, equity or mixed payment depending on the scale of acquisition target. In the condition of small scale and unlikely to bring liquidity risk, cash payment is preferred. In the condition of large scale, equity and mixed payment are preferred. Meanwhile, the proportion of equity payment should be controlledbecause of the equity separation of the MC company. In the implementation stage, acquisition targets should be given strict investigation, reasonable assessment about price and define the management mode after merger and acquisition.In order to solve the existing problems in the past of the MC company about merger and acquisition, the following strategic measures are put forward in this thesis: setting up foreign investment management and risk control department to ensure the organizational structure; reserving dispatched talents and assigning in-service talents jobs commensurate with their abilities to guaranteetalents team; making moderate use of merger and acquisition fund and introducing professional third party institution timely to safeguardexternal resources;preposing integration planning, forming integration working group and comprehensive integration plan to securitythe process of integration.