The Impact Of Debt Financing M&A On M&A Performance

With the economic development at home and abroad,merger and acquisition has become an important way to take part in international cooperation and competetion.The change of macro policy will undoubtedly further accelerate the pace of "going out" of Chinese enterprises.Such a background and policy environment not only brings challenges to the company's international transformation,but also broadens opportunities in the international market.Proper acquisition is not only an important strategic measure for the company to actively respond to the national development strategy,participate in international cooperation and competition,but also an important step to implement the company's global development strategy and industrial upgrading.Merger and acquisition usually needs a lot of money in a short time.However,internal retention can not satisfy the total capital demand.Therefore,financing is an important part in the process of merger and acquisition.And the research of performance is also quite important.CTCI is the representative company in domestic industry.The analysis of the case will bring some enlightenment.This passage researches the performance of merger and acquisition between CTCI and TFH from the perspective of market performance,financial index and financial risk.Firstly,this paper uses event research method,taking M&A as event.The empirical analysis finds that this event will bring significant negative excess return in a short term and insignificant negative excess rate of return in a long term.Secondly,this paper uses the financial index analysis method to the case,we can conclude that the profitability,growth ability and operational capability are improved because of the merger and acquisition.But the debt paying ability is getting worse.As for financial risk,the financial status of CTCI is getting worse.The implementation of this M&A strategy has strengthened inter industry competitiveness.To a certain extent,it has realized the expansion of asset scale and the huge leap of net profit,which makes the company keep the trend of continuous development and growth in the industry.In addition,this paper uses Z-score model to analyze the financial risk after M&A,then we can conclude that the company's financial status changes from good to unstable,which has certain financial risks.Based on the case study,this paper finds out the successful experience and existing problems of this M&A,so as to provide reference suggestions for the futureM&A activities.For the company,it needs to use financial leverage in a more proper way and keep a suitable debt scale.Also,it need to integrate after merger and acquisition.For the market,it needs to raise degree of specialization of financial institution.For the government,it needs to sound the legal system.