Analysis On Synergistic Effect Of Cross-border Mergers And Acquisitions In Large Equipment Manufacturing Industry

Since the reform and opening up,the equipment manufacturing industry has enhanced competitiveness with each passing day after long-term development,especially the construction machinery enterprises which take Sany as the representative now have maintained the absolute domestic market share,while most foreign concrete brands have been out of the Chinese market.To improve overseas market share so as to maximize the benefits,cross-border M&A has become a vital means for the overseas expansion of domestic enterprises.Compared to simply building factories abroad or solely relying on financial M&A,cross-border M&A is able to achieve rapid expansion in a relatively short period of time.After 2012,as the national economic stimulus comes to an end,large-scale infrastructure construction has slowed down,real estate regulation has been strengthened,and the supply-side reform has been implemented,thus the domestic construction machinery market is shrinking,purchase demand of new equipment decreases,while market stock equipment and legal equipment increases,both the corporate sales and profits of the construction machinery industry are experiencing a continuous declination.While the four trillion economic stimulus is taking effect,the overdue payment resulting from the vicious competition among those construction machinery industrial magnates has turned into bad debt in the latter part of the sale,bringing cash flow crunch to the enterprises.All of the above-mentioned conditions force the construction machinery industry to actively carry out transformation,As a private enterprise,Sany has showed a rapid response and enforced rapid transition with practicing value selling from top to bottom,focusing on risk control,and actively exploring overseas markets which is the most crucial.The overseas sales of Sany have been improved year by year after the cross-border M&A of Putzmeister.In 2016,the overseas sales of Sany have reached 45% of total sales,and overseas market share is still further improved.Judging from simple financial indicators,some financial indicators of Sany are lower than those before the M&A,which is caused by insufficient domestic demand,and as all the indicators are better than both the market and peers,the cross-border M&A is actually quite successful.Cross-border M&A are also facing cultural differences between Chinese and foreign management,product positioning in the high-end lines,channel construction overlap,excessively fast fixed assets investment in the fast-growing period,the insufficient domestic demand after the M&A,and excess production capacity due to market downturn.How to effectively integrate has become a major problem after the cross-border M&A.In the rapid growth period of domestic market,enterprise management problems can be easily concealed.However,once the domestic market declines,corporate financial risk prevention,especially working capital risk management,is particularly important.After the cross-border M&A,Sany has attached importance to the integration of resources of both parties,implemented the strategy of Internationalization is Localization,relyed on information technology and embraced the Internet,introduced German technology to carry out intelligent manufacturing,and reduced financial risk through the increase in the absolute amount of working capital and cash ratio.Sany focuses on the development of medium-and long-term business strategy,prompts the strategy implementation through performance assessment,and strengthens the integration and management at home and abroad after the M&A,The cross-border M&A has brought the integration effect of 1 +1> 2,therefore Sany can stay ahead of peers and achieve transition success in the negative domestic market environment.Cross-border M&A can effectively reduce the waste of enterprise resources and enhance the profitability of listed companies;cross-border M&A can bring synergies for enterprises to achieve effective integration of internal and external resources and enhance the competitiveness of enterprises;Sany has successfully accelerated the process of internalization by acquiring Putzmeister,especially in the integration of international management,operating and finance,which generates favorable market response.As a successful case of cross-border M&A,it is necessary to analyze the process of using cross-border M&A resources integration to offset the negative impact of the decline in the domestic market for Chinese enterprises.Firstly,this paper elaborates the research background and significance,reviews the relative study of international and domestic scholars on the overall market and the synergistic effect of M&A,introduces related concepts and theories of the synergies of cross-border M&A,then deeply analyzes the managerial,operating and financial synergies of cross-border M&A with Sany's M&A case,and evaluates the effect of its implementation.In the aspect of managerial synergies,the paper analyzes the three approaches,including accelerating the turnover rate of assets,integrating human resources and integrating corporate culture,and evaluates the managerial synergies from aspects of cost reduction and asset management level.The study finds that the costs are effectively controlled,turnover speed is better than peers,and a certain management synergies is obtained on the whole.In terms of operating synergies,this paper studies the integration of overseas marketing channels,technological innovation,and the straightening out of industrial chain,and evaluates the operating synergistic effect from aspects of growth ability and profitability.The analysis shows that the growth ability and profitability are enhanced,and sound operating synergies has been achieved.As for financial synergies,the paper discusses the three paths of jointing PE fund acquisition,raising cash ratio and reducing product cost,and evaluates the financial synergistic effect from three aspects: financial risk control effect,tax saving effect and expected effect.All the three Aspects have been significantly enhanced,thereby effectively achieving the financial synergies.Finally,this paper summarizes the experiences and concerns of Sany's cross-border M&A through the analysis of the path,evaluation and analysis of the managerial,operating and financial synergistic effect.Increasing the turnover rate of assets,accelerating internationalization and reducing costs are important experiences in realizing the synergistic effect of cross-border M & A.At the same time,enterprises should also focus on the integration process throughout the whole process of cross-border M&A,domestic enterprises need to focus on corporate M&A financing capacity in cross-border M&A,in order to better follow-up integration work and fully bring about synergies.