Research Of Merger Acquisition

While developed countries are slipping into recession, emerging economies like China are becoming a main force in counteracting this so called worldwide economic "suffocation". IMF predicts that GDP growth rate of developed countries are 0.5% this year, hence the forecasted 3% global growth rate has to largely come from developing countries, especially China.When a series of policies regulating foreign acquisitions in China are released, China has finally opened its full door to foreign acquisition. As part of foreign direct investment, acquisition is a partial solution for Chinese companies to tackle issues like financing, technical and management issues, gaining market share and building core competencies. Some specialists consider foreign acquisition in China an important form of attracting foreign direct investment.This article is based on SHV Energy's acquisition of Shanghai Suchuang Group, with emphasis on operational risks associated with merging and acquisition. We define such a research scope due to the importance of merging and acquisition in company strategic management. From SHV's capital injection of US$627 million in June 2006 to capital reduction of US$627 million in December 2008, SHV has gone through stages of merging and acquisition, operational management and retreating. SHV's heavy investment in capital, human and material resources resulted in failure in the end. Business M&A are high risk level activities, containing finance, legal and auditing risks. After making analysis on business M&A motivation, the three risks involved, human resource integration and cultural conflicts, this dissertation concluded that integration of risks plays a key role on M&A activities. A real and successful integration only happens when synergy finally forms by combing the two companies. Hopefully, this article will throw some light on M&A of Chinese companies.