Research On Financing Strategy And Performance Under The Lepu Medical M&A Strategy

With the unshaken support of government's policies and increasing demand of market,the merge and acquisition among medical equipment enterprises shows a strong growth.According to A review and prospect about the acquisitions of Chinese Medical Equipment Enterprise published by Price Waterhouse in 2016,there were 81 acquisitions happened among medical equipment enterprises in 2015,up 17%compared with last year's 69 acquisitions.Denotative merge and acquisition is an effective way for medical equipment company to achieve a rapid development,because of the relentless research and development barrier,marketing obstacle and small market appetite caused by market segmentation.However,implementing a merge or acquisition need huge sum of capital.The successful of merge and acquisition highly depends on which financing method does the company choose.Due to the undeveloped capital market and strict-controlled financing environment,companies encounter a lot of difficulties,such as the limitation of financing methods.Besides,the inconsistent conclusions about merge an acquisition performance of domestic and foreign researches hardly provide a reference to single enterprise.In order to ensuring a smooth merge or acquisitions,Chinese medical equipment enterprises try to find out how to make a scientific decision on financing method and how to assess the merge and acquisition performance.And its provision of adequate,less risky and low-cost fund promotes the creation of enterprise value.In this paper,a study about a series of acquisitions,carried out by Lepu Medical Technology(Beijing)Co.,Ltd.since its initial public offerings,will be deeply analyzed to find out its financing choice and protection mechanism.And it will investigate what changes had the acquisitions brought to corporation performance as well as whether the enterprise value had increased.On the basis of this study,it proposes a reference to Chinese medical equipment enterprises to solve the problems of financing selection,and evaluate the performance of merge and acquisition.This paper reviews the literature and classical theory related to merge and acquisition finance and enterprise performance,and confirms a corporation performance evaluation methods at the beginning.On this basis,the article of Lepu Medical Technology(Beijing)Co.,Ltd.as an example,introduces its process of acquisition and strategy of acquisition finance.Firstly,LMT raised abundant fund through initial public offerings,which enhanced its ability of financing from otherchannels.Secondly,LMT took full advantage of flexibility in its own fund to implement quick acquisition individually or in combination with other financial methods.Thirdly,it used debt fund for finance cost reduction and funding channel expansion.Fourthly,LMT tried to leverage the acquisition to realized double purposes of quick acquisition and debt financing.Fifthly,company adopted a series of measures to guard against funding risk.And then,analyzing what changes had these different financing methods brought to LMT's short-term and long-term performance.Finally,this paper draws a conclusion of the reasons for the success and shortcut in LMT's acquisitions from the prospect of financing method,and proposes recommendations for these deficiencies.Through the analysis of this paper,references for successful merge and acquisition as well as enterprise performance evaluation are hoped to be provided to Chinese medical equipment enterprises to overcome the barriers in capital market.