Analysis On The Influencing Factors Of The Premium Of M&A Transaction In China's Medical Industry

With the increase of the residents' ability to pay,the health care expenditure of urban and rural residents has risen rapidly.Under the background of aging population,the demand for health care services in China is increasing,but due to the long existence of small and medium enterprises and the implementation of the new GMP certification standards in 2016,the medical market competition continues to intensify,small and medium-sized pharmaceutical enterprises are facing great survival pressure.On the other hand,as a result of factors such as the integration of resources,diversified business layout and the search for greater market share among large pharmaceutical companies,mergers and acquisitions in the pharmaceutical and medical equipment sectors are expected to continue to increase in the future.M&A premium is a phenomenon prevalent in M&A transactions.The premium of M&A transactions in China's pharmaceutical and medical equipment industry are often very high compared to other industries.As the M&A premium is critical to the success of the transaction,also because the medical industry is of great significance to China's future economic structure upgrading and transformation as it is a technology and knowledge-focused area of the representative of symbolizing the future direction of industry development,it is of great theoretical and practical significance to study the factors influencing the premium of M&A in China's medical industry.Based on the existing research of influencing factors of M&A premium,this paper puts forward six assumptions on how to influence the M&A premium of listed companies of medical industry in China from the aspects of payment methods,target enterprise capital structure,share transfer ratio,target enterprise growth potential,target enterprise scale and target enterprises' R&D investment,then a multiple linear regression model was constructed based on the previous assumptions.Through the empirical analysis of the model,it is concluded that there is a significant positive correlation between the premium rate of M&A and the ratio of equity transfer and the price-earnings ratio of the target enterprise,while the other four explanatory variables have a certain degree of interpretation on the premium rate,the relationship between them is not significant.These results can assist the buy side of a M&A deal to make a reasonable pricing,reduce unnecessary spending from theoretical and empirical point of view of the medical industry in China,enhancing the overall efficiency of mergers and acquisitions.