Financing Strategy On Mergers & Acquisitions

Since 1990s, under the tendency of the economic globalization, the close attention of Mergers & Acquisitions (M&A) is paid gradually by the world as an effective way of expanding market share rapidly, forming scale effect, and optimizing capital structure.M&A is a complex and systematical process. Financing is the most important in the implementation of M&A, which has been up to the level of development stratagem from the strategy level. In the activities of M&A, the company may adopt various financing methods. If the company can choose appropriate one in line with its characteristics, it may get twice the result with half the effort; otherwise, the company may bear the heavy burden of debt and even exert ill effect on normal production and management. Therefore, suitable financing method and scientific strategy are important issues that should be focused on.In this thesis, the strategies on M&A financing are analyzed from the perseptive of the party that takes M&A activities actively.Firstly, under the direction of normal principle, the company should analyze each M&A financing method comprehensively and systematically, forecast the financing gross scientifically and make initial arrangement for the channel and method according to its condition.Secondly, the company should pursue the lowest capital cost through the analysis of multiple profiles of financing methods, abiding by the principle of optimal capital structure and the target of maximum company value.Taking account of the effect of different way of payment on the financial and economic benefits, the company should choose appropriate financing method and channel to meet the requirement. Especially in the "stock exchange" transaction, the company may make use of " L-G Model" to estimate the exchange rate scientifically.Finally, under the condition that the scale of direct financing is small and the financing tool is deficient in China, the company can take advantage of investment bank to pursue new channel and method of direct financing.