Analysis On Operation Synergy Effect Of Horizontal M&A From The Perspective Of Bank Financing

In December 2008,the CBRC promulgated "Guidelines for Risk Management of Merger and Acquisition Loans of Commercial Banks"(No.84 of CBRC).This is the first and only regulation on merger and acquisition loans of commercial banks in China.Chapter II of the Guidelines requires commercial banks to evaluate the strategic risks of M&A by first analyzing the "industrial relevance and strategic relevance of both sides of M&A,as well as the possible synergistic effects".They should also comprehensively analyze the risks related to M&A,establish a reliable and robust financial model,and evaluate and calculate the future cash flows of both sides.The relevant policies on synergy effect and cash flow calculation in the Guidelines mean that commercial banks must quantify synergy effect effectively before formulating financing schemes for M&A loans.In practice,when commercial banks declare M&A loan business,the analysis of the source of M&A loan repayment is often limited to the traditional method of fixed assets loan repayment source analysis.Generally,the future income and earnings of both sides of M&A are given a growth rate according to historical performance,and the free cash flow used for repayment in the future is given as a comparative one.Simple trends are measured.The analysis of M&A motivation and synergy effect is rather shallow,and the synergy effect has not been measured.It can not fully comply with the requirements of the CBRC Guidelines for the analysis of synergy effect and the establishment of a reliable and robust financial model.The main reason is that most credit operators of commercial banks have a superficial understanding of M&A loans and synergies,fail to grasp the accurate concept of synergies,and fail to meticulously measure the source of repayment brought by synergies.This paper takes Yuyue Technology's M&A financing scheme of Esaote in Italy as an example to analyze and discuss the synergistic effect of horizontal M&A from the perspective of commercial bank's M&A loan.At the same time,according to the analysis and prediction of the synergistic effect,the paper further refines the relevant forecast data of cash flow for repayment and demonstrates the feasibility of the M&A loan scheme.The innovations of this paper are as follows: firstly,to examine M&A transactions from the perspective of commercial banks(M&A loan providers);secondly,to analyze M&A motives beforehand and predict and quantify synergies;and thirdly,to combine the quantification of synergies with the calculation of accounting cash flow.