Synergies,Payment Methods And M&A Premium

The vigorous development of China's capital market and the dual drive of economic restructuring have brought the M&A activity in full swing in the capital market.Under the background of mixed ownership reform,state-owned enterprises absorb social capital through the transfer of shares in the open market.M&A are not only important means for enterprises to expand their sales and increase their market shares,but also become important means for private enterprises to absorb state-owned capital and enjoy government dividends.Synergies will bring about corporate performance for company is the main reason of managers are willing to pay high premiums.The payment method of mergers and acquisitions will also have a significant impact on the merger premium.If the acquirer adopts stock payment method,then the target company need to take the risk of future stock price volatility.Therefore,the target enterprise will require a higher premium to make up for the potential risks.So,the paper studies the impact of synergies and payment methods to the mergers and acquisitions.This article takes the M&A transactions in China's capital market from 2008 to 2016 as the research samples,and combs the current research on the synergies,M&A payment methods and M&A premium with the research results of the existing literature.Based on asymmetric information theory and signal transmission theory,the paper analyzes the individual and interaction effects of synergies,payment method on M&A premium.Through theoretical analysis and empirical test,the dissertation draws the following conclusions:M&A firms are expected to pay a higher premium when the synergies exist.Secondly,acquirers of share-based payments pay higher premiums on mergers than cash-paid.Thirdly,synergies in M&A and payment methods have positive effect on M&A premium in in private-sector companies.According to the empirical research results,the dissertation proposes the following suggestions:Mixed ownership reform is correspond witn the discipline of the capital market and is important for revitalizing the market economy.The government should give a lot of support of this reform.Private enterprises should also actively participate in mergers and acquisitions of state-owned enterprises by means of stock payment.From the point of view of M&A payment method,the payment method in our country is still too simple.The financial market of our country should support enterprises,design diversified financial products and enhance the development of financial market.Second,the company's internal governance mechanism should improve in the future.Board of directors should give more supervision and control over the professional managers'competence to make a full assessment of the potential risks and the post-merger value in the M&A decision,and then give a reasonable premium on M&A.