Research On The Cross-border M&A Financing In Private Enterprise

Since the reform and opening up, China’s private economy has changed dramatically. The private economy creates about 60 percent of GDP per-year, provides a large proportion of new jobs, and promotes the continuous development of China’s economy forward. However, because of the impact of domestic inflation and slowing economic growth, the growth environment of private enterprise has changed in recent years, while raw materials and labor costs have increased, and competition in the industry has become violent. Since 2008 the US financial crisis and the European debt crisis continues to affect the global economy, it creates an opportunity for private enterprise to reposition themselves in the global market.Overseas M&A has many advantages than conventional enterprise development, such as spending less, growing faster, saving time cost. Tangible or intangible business can be achieved through overseas mergers and acquisitions. Overseas M&A help private enterprise to avoid trade barriers and expand overseas markets. Therefore, an increasing number of private enterprises begin to acquire overseas assets through overseas acquisitions or expand overseas markets in order to achieve development and transformation of enterprises.Chinese private enterprise has been restricted traditionally by the financing difficulties. Mergers and acquisitions financing requires enterprises to raise a large amount of funds in a short time and make the enterprises continue as a going concern after the mergers, so that the enterprises will face more problems. The choice of the financing method decides the enterprise’s capital structure which affects the operating performance of the enterprise, so the key to solve the financing problem is choosing an appropriate financing method. At present, with the development of financial intermediaries, new financing methods have been put into use. Especially after the operational success of the free trade zone in Shanghai, implementation plans of setting up free trade area in Guangdong, Tianjin and Fujian were approved. Many policies supporting the development of private enterprise were introduced. The overseas M&A financing environment of China’s private enterprises has been greatly improved. So it has great significance in this study based on the cross-border M&A financing in private enterprise.The article discussed the cross-border M&A financing in private enterprise based on the condition that the size of private enterprises in overseas mergers and acquisitions increases year by year, companies pay more attention to the development trend of international manufacturing, and companies more like Europe market and the United States market, as well as more like rational strategic acquisitions. Specifically, this paper first analyzed the overseas M&A financing and operating financing of private enterprises. Then the article analyzed the cross-border M&A financing in private enterprise together with the present situation of our country, from internal and external environment affecting private enterprise overseas M&A financing. Then choosing the "star" in the manufacturing enterprise, GEELY, bought Volvo as an example. The article analyzed the financing process of GEELY based on the influence environment of financing. The article analyzed the financing situation of the case from the financing structure, financing channels and financial risk, then drew some relevant inspiration. Then the article put forward recommendations on overseas mergers and acquisitions financing in private enterprise, combined with the result of theoretical analysis and case analysis. First, in overseas mergers and acquisitions financing, private enterprise should accelerate the development of its own company, in order to improve financing efficiency. Second, private enterprise must strengthen cooperation with financial intermediaries to accommodate the financing environment. Then private enterprise should expand the idea to broaden the financing channels. Under the current financing environment and policy environment, the recommendations proposed for private enterprise, how to be more rational and efficient to finance in mergers and acquisitions have some significance.