The Case Study On Financial Synergy Effect Of The Merger And Acquisition Between Shenyin & Wanguo And Hong Yuan Securities

After the 21st century, under the background of economic globalization, China’s economic rapidly develops. A large number of companies want to seize the opportunity to achieve rapid expansion, and mergers and acquisitions (M & A) has become the tool to expand business scale, centralize production capital and achieve scale growth of these enterprises. M & A activity has a certain complexity. Our securities industry began in 1987, when the first securities company was founded, then experienced four waves of mergers and acquisitions. Because the relevant laws and regulations were not perfect, the system was incomplete at that time, most of the securities industry mergers and acquisitions were guided by government. With the improvement of the financial legal system and the increasing competitive pressures of the securities industry, mergers and acquisitions among securities companies gradually began to become market-oriented to provide competitive ability and M & A cases has gradually increased. On 25th July 2014, the restructuring plan of Shenyin & Wanguo merging Hong Yuan Securities was announcement.This is another major merger case in the securities industry following the Founder Securities merging National Securities, and it is the largest market mergers and acquisitions case in China’s securities industry by far. This case was implemented for a whole year. Both of the two brokerages are "old" brokerages. After the merger, it will undoubtedly be born a giant brokerage and change the top five giant ranking of the securities brokerage industry.Whether the merger synergies can create value has a more important effect on the success of mergers and acquisitions than the formation and implementation of the merger plan for mergers and acquisitions business. In this paper, carrying on a detailed analysis of the synergies, especially the financial synergies brought about by Shenyin & Wanguo merging Hong Yuan Securities combining with the synergy effect theory.The whole paper is divided into four parts. The first part is the introduction, including the background, significance and literature review of mergers and acquisitions and synergies. The second part is the case presentation, introducing the industry background of Shenyin & Wanguo merging Hong Yuan Securities, the business background of both companies and the specific programs and result of the mergers and acquisitions. The third part is the case analysis. First giving a brief introduction about the motive of Shenyin & Wanguo merging Hong Yuan Securities,leading to the financial synergies from the reason analysis. Subsequently, carrying on detailed financial synergies analysis based on this case, and evaluating the financial synergies by the method of discounted cash flows, achieving a positive financial synergies in this case. The fourth part is the case of conclusions and recommendations, through the above analysis, gets some conclusion, and puts forward some reference opinions,,hoping to contribute to the success of other domestic mergers and acquisitions.