Research On The Choice Of Financing Mode Of Overseas M&A By Enterprises

Over the past five years,overseas mergers and acquisitions have become one of the best ways for Chinese enterprises to introduce international advanced technology and acquire excellent management experience.The transaction amount of overseas mergers and acquisitions increases from hundreds of millions of dollars to billions of dollars,and the ease with which money can be raised in mergers and acquisitions become the key to the success or failure of the M&A impact factors,so the choice of the financing way is of vital importance to the enterprise overseas mergers and acquisitions.As the influential factors of M&A,the time,financing cost,risk and other factors should be considered.Along with the increasing scale of M&A,the funds increases,and the single mode of financing can no longer meet the needs of it.Because of the high leverage ratio,leveraged finance is an optimal choice of debt financing.Under such background,this paper makes analyses on present literature of influence factors of M&A financing and the effects of these factors on the choice of financing mode of enterprises.Based on the existing research results of domestic and foreign scholars,the influencing factors are summarized and the financing mode selection and analysis system is established.According to financing mode selection and analysis system,this paper analyze the selection of M&A financing mode,compare result with the actual financing method in the process of enterprise merger and acquisition,and evaluate the selection of the financing mode of the case.The paper analyzes domestic and foreign literature about relevant theories of M&A financing.On the basis of predecessors' research,the paper builds the analysis frame of M&A financing choice and takes Apex Technology Co.,Ltd.as an example.The final results of case analysis consist with the analysis framework.Through analysis,there are several reasons why Apex mergers by high leverage.First,before M&A Apex's financial condition is good,the asset-liability ratio is lower,the debt financing is beneficial to improve enterprise value.Second,the time of debt financing is shorter than that of equity financing,which can meet the requirement of time limit of merger and acquisition.For Apex which has a high degree of equity ownership,raising large sums through debt financing avoids dilution of corporate control and lowers the cost of financing.In general,if the enterprise has a good financial situation,it can make use of many times by a small amount of its own capital leverage quick and efficient to raise the funds needed for the overseas merger and acquisition,but the high leverage to raise big money at the same time,it brings to the enterprise great risk of insolvency,enterprises rapidly,after the merger to reasonable repayment path planning funds,reduce M&A financing risk of insolvency.