Research On Financing Methods For Overseas M & A Of Chinese Private Enterprises

With China's “Go Out” strategy and the “Belt and Road” promulgating,Chinese companies,especially private enterprises,have interested in overseas mergers and acquisitions(M&A).In 2016,private enterprises have replaced state-owned enterprises as the main participants.Private enterprises are interrupted easily by many factors while financing.The failure rate of mergers and acquisitions is as high as 42%due to insufficient funds.Therefore,financing method is very significant to private enterprise in M & A financing.At present,with the improvement China's capital market and policy-driven,innovative financing methods such as private equity and exchangeable bonds have emerged.To a certain extent,these financing methods have broken through the financing restrictions of private enterprises,which is worthy of further research and discussion.This article takes the overseas M & A financing methods of China's private enterprises as research direction.Taking Apex's merger as an example and combining the current situation and obstacles of private enterprise financing,this article studies the application of innovative M & A financing methods for future development.Based on the research about M & A financing from domestic and foreign scholars and guided by the theory of financing priority,this paper takes Apex M & A Lexmark as the case study object on private enterprises current status.In the part of case analysis,“private equity + shareholder loan + syndicated loan + exchangeable bond” financing methods used by Apex are studied.Firstly,Syndicated loans finances80% of the M & A funds in three months for its short-operating cycle,large-financing scale and low requirements for debtors,which is the first choice for overseas M & A financing.By mortgaging the equity of Apex,Senna Technology issued exchangeable bond to finance huge amount of cash.And Apex loaned the cash from its controlling shareholder,Senna Technology.Finally,the joint of private equity also provided resources and assumed some risks.Subsequently,the weighted average cost of capital method was used to show the cost advantage of this financing method.The results show that this financing method broadens financing channels of private enterprises.In terms of cost,it is significantly better than traditional financing methods.Although there are great financial risks by adopting this financing method,the participation of private equity has eased short-term risks.Regardless of the financing scale,cost andrisk,this financing method is worthy of researching for private enterprises in overseas mergers and acquisitions.