Research On The Application And Effect Of “Listed Company + PE” M&A Fund In The M&A Of “Snake Swallowing Elephant”

In order to seek new profit growth points,many domestic enterprises conduct cross-border mergers and acquisitions,among which "snake swallowing elephant" is a method often adopted by enterprises.In such mergers and acquisitions,enterprises are likely to fall into a crisis of tight funds,and PE institutions can play a considerable role in the stage of fund-raising and post investment management,forming a "listed company + PE" M&A fund model.As an innovative model,listed companies and PE institutions can give full play to their respective strengths,complement and complement the advantages of industrial resources and capital operation,and contribute to the vigorous development of the M&A market.However,the development of M&A funds in China is not mature,and there are still many obstacles in specific practice,resulting in many M&A funds becoming "zombie funds".So why do listed companies set up M&A funds with PE Institutions? What can solve the problem of "snake swallowing elephant" ? How to improve the operation mechanism of this model and take the advantages of M&A funds as a sharp weapon of M&A? How to control the risks and performance of "snake swallowing elephant" M&A? The study of these problems is of great significance to the enterprises that want to successfully implement the M&A of "snake swallowing elephant".Taking China Tianying’s M&A fund to acquire Urbaser as an example,this paper analyzes the motivation of establishing M&A fund,the operation and risk of M&A fund,and the performance of M&A using this model.The research found that:(1)the purpose of establishing M&A fund in Tianying is to give full play to the leverage effect and solve the capital problem of "snake swallowing elephant";Make full use of the professionalism of PE to solve the annexation problem of "snake swallowing elephant";With the help of PE’s rich post investment management experience,solve the digestion problem of "snake swallowing elephant" after M&A.(2)China Tianying designs the organizational form,financing structure,operation mode and exit mechanism of M&A fund.It not only forms the M&A fund mode of "controlling shareholder + listed company + PE",adopts the financing mode of "equity leverage + creditor’s right leverage + three-tier main body" and uses the earn out clause and performance commitment clause,and timely replaces the debt and exits the M&A fund in advance to dismantle the structure of the fund.Finally,the listed company acquires the target enterprise to realize the exit of the M&A fund,which is conducive to the interests of all parties.(3)Because this case has the typical characteristics of "snake swallowing elephant",it is different from other traditional mergers and acquisitions,and there are different types of risks.In particular,the financing risk and integration risk are faced with problems such as high asset liability ratio,hidden dangers of huge goodwill impairment,and sudden increase in the difficulty of integration.(4)M&A funds are different from traditional M&A methods in short-term and long-term performance evaluation.The establishment of M&A fund by China Tianying can produce positive market effect in the short term and bring excess returns to the shareholders of the company;In the long run,the use of M&A funds to complete the "snake swallowing elephant" M&A has significantly improved the operating capacity,profitability,growth capacity and short-term solvency of listed companies.It can be seen that the form of "listed company + PE" is more conducive to the resource integration in the later stage of M&A,so as to realize synergy and enhance enterprise value.Based on the above conclusions,this paper puts forward suggestions from the perspective of listed companies and regulators: listed companies need to design reasonable transaction structure,financing strategy and payment mode with the help of M&A funds from the perspective of their own development strategy.While solving the problem of "snake swallowing elephant" fund-raising,they should also focus on preventing financing risk and integration risk,and pay attention to the subsequent value creation of M&A targets.Regulators need to strengthen supervision,focusing on the cross-line behavior of touching the forbidden zone and manipulating the stock price by virtue of the title of market value management.At the same time,strengthen the information disclosure of M&A funds,and balance privacy and openness,flexibility and compulsion.