Research On Screening And Evaluation Of Target Firm In M&A Based On Synergistic Effects

The enterprise merger and acquisition is the result of market economy, and since the late 19th century, the whole world has experienced five merger and acquisition tides. At present, the enterprise merger and acquisition as one way of property rights of enterprises transaction and the reorganization , has already become a very important economic phenomena in Western developed country. It's scale and duration was both unprecedented, and has the increasingly fierce tendency. In our country, the principle as the market economy that who superior win and the inferior wash out is accepted by more and more people with economic system's deepening. The enterprise merger and acquisition will become one important form of the enterprise capital transport business, and will play a very vital role in the process of economic development.However not all cases of merger and acquisition were successful. Some research of domestic and foreign indicated that the majority cases of merger and acquisition was failed. The unreasonable target enterprise choice for merger and acquisition is mainly responsible for the failure. The behavior of unreasonable target enterprise choice was very popular in our country .For example, some enterprises choose target for merger and acquisition by sole standard even some enterprises has no means for further screening. And these would reduce the success ratio of merger and acquisition. So it is vital that how to make an objective evaluation and screening of target firms base on synergetic effects before the process of merger and acquisition. And this paper conducted some research on these questions.The purpose of this paper is to attempt to supply a scientific indicator system base on synergetic effects for target enterprise's appraisal in the merger and acquisition. Firstly, the paper introduced some theories on the enterprise of merger and acquisition ;Then, in view of the two shortcomings in evaluation of target enterprise for merger and acquisition in our country that the indicators is too little for the first screening and imperfect for the second selecting, this article expanded the indicators for the first screening and designed some indicators for the second selecting according to three kind of merger and acquisition including the crosswise merger and acquisition, the longitudinal merger and acquisition and the mix merger and acquisition. Then, the paper analyzed the synergistic effect of them in the research on evaluation of target enterprise, and consequently constructed the indicator system for evaluation of target enterprise based on synergistic effect. Particular, the paper which was the first literature introduced the fuzzy matter-element model for goal enterprise's appraisal. Finally, this article selected the RARE-EARTH HI-TECH who would select one company among four for merger and acquisition in 2004 as example and use the conducted indicator system to evaluate the four related target enterprise by the fuzzy matter-element model introduced by the paper. The research findings showed that the conducted indicator system worked very well.