The Research Of The Motivation And Synergy Effect Of Chinese Securities Companies’ Cross-border Acquisition

With China’s economy developing into the transition period of the structure,the economic growth speed is facing enormous downward pressure,the competition among financial institutions is increasingly fierce.With the realization of Shanghai-Hong Kong connect,Shenzhen-Hong Kong connect and RMB included into SDR,financial institutions will have to distract their attention to the overseas market.During the stock market ups and downs in 2014 to 2015,China’s securities companies and banks have accumulated a very large scale of funds.At the end of 2016,the domestic market appeared "asset shortage" pattern.At this point,the Chinese securities firms take use of capital to acquire overseas professional or integrated security institutions,which can not only improve their professional level and expand the market of domestic and overseas business,are also able to provide extra funds to obtain effective channels of investment.At present,China’s securities firms to conduct overseas merger and acquisition cases incidence is on the rise.For securities companies that have successfully completed the overseas merger,the author focus on the real motivation of its overseas mergers and acquisitions,whether long or short period after the merger could create synergy,as well as what kind of synergy,which are core problems.This paper is based on the research literature analysis,case studies and comparative analysis.Firstly,the author will conclude as well as comment on the motivation theory and synergy theory of acquisition,and describe the development history of Chinese enterprises ’ overseas mergers and acquisitions.Secondly,the author selected seven cases of successful overseas acquisitions of securities companies according to three standards which are the acquirer being the securities company,cross-border mergers and horizontal acquisitions.And the author will introduce the basic situation and business distribution of the acquirer of the seven cases,and business situation and changes of controlling shareholders of target company,the paying methods will be summarized as well.Then,through the annual reports of listed companies to collect both business and financial data of seven merger cases,combined with merger and acquisition announcements and media reports,the author summarize the motivation on acquisition companies,and comparatively analyze long and short term operating synergy mergers and financial synergy effects qualitatively and quantitatively.Finally,the author will give some enlightenment for China’s securities companies successful overseas mergers and acquisitions.In seven cases,the registration places of the target company are in Hong Kong,New Zealand,Portugal or other overseas regions,and are firms that belong to the securities industry.Therefore,the mergers are cross-border mergers.It is believed that the motivation of overseas mergers and acquisitions of securities companies had three,namely access to the target company’s business technology,gets a mature customer resource of the target company and the pursuit of IPO in Hong Kong stock market.In the short term after the mergers completion,due to high development costs,which causes acquisition companies to make ends meet in an overseas operation,operating synergy is not very significant.Experiencing 3 to 5 years’ consolidation,long-term operational synergies begin to emerge,characterized by increasing business income,complementary advantages on business,the realization of economies of scale.Financial synergy effects of M&A is obvious,which characterized by strengthen overseas financing capacity,reasonable internal cash flow and the increase of debt paying ability three aspects.At the end of this paper,there will show the following enlightenment about the securities companies carrying out overseas acquisitions :The acquisition company can build overseas business platform in advance,make real motivation of overseas mergers and acquisitions clear and should choose the Target Corp carefully according to their assets and businesses situation,select the timing of M & A rationally,pay attention to the integration of advantages of both sides.In the future,China’s securities companies overseas market expanding will set off a new round of overseas acquisitions wave,hoping that this article can provide a reference for domestic companies securities’ successful overseas acquisition.