The Cross-Border M & A Performance Of Private Enrerprises In Zhejiang Province

With the development of economic globalization, Chinese enterprises ushered in a new wave of cross-border mergers and acquisitions in recent years. More and more private enterprises which are not inferior to state-owned enterprises have the ability to merge and purchase foreign companies, they become so active on the international stage. As the developed province of private economy, cross-border M&A has become the important way and measure to implement the "going out" strategy for Zhejiang. Facing with the cross-border mergers and acquisitions which includes risks and benefits, to analyze the performance of cross-border M&A for the private enterprises of Zhejiang has become a fairly targeted study direction which contains theoretical and practical significance Simultaneously in China’s market economy.In this paper, the author chooses the private enterprises of Zhejiang as the research object, based on the case of Zhejiang Longsheng acquisition of DyStar, and revolves the major problem whether the performance of enterprises has improved after the cross-border M&A to research, in order to expose the economic consequences of cross-border M&A of private enterprises in Zhejiang Province. Firstly, the author reviews the basic concept of cross-border M&A, the theory of the performance of M&A and the methods that can be used to evaluate the M&A performance. Secondly, selecting the typical cases of cross-border M&A of private enterprises in Zhejiang in the past five years to analyze and summarize the current situation and characteristics of cross-border M&A, the results show that the features of transnational mergers and acquisitions of private enterprises in Zhejiang include the strong tendency for holdings, the centralization on manufacturing, the main motivation for getting technology and resources, etc. Next, analyzing the case of Zhejiang Longsheng merged DyStar deeply and researches the short and long term performance after merging by using event study, accounting index and Balanced Score Card. The results show that the excess cumulative return in the event study window period is greater than zero, indicating that the cross-border mergers and acquisitions in the market made a good reflection and produced the positive wealth effects for shareholders. After the acquisition, the operating performance of Zhejiang Longsheng has been overall improved; especially the financial performance has been improved obviously in the first years after the acquisition. Now Zhejiang Longsheng generally shows a good financial condition, the profitability, development potential land shareholders’ profitability has been improved in varying degrees, the relevant financial indicators show a continued upward trend, while the solvency and operational capability after the merger fluctuate slightly with rising first and then decreasing. From a strategic perspective to see this M&A event by the four dimensions of the Balanced Scorecard, Longsheng has achieved the synergies of operation, management and finance after the merger as the result of its strategic integration in human resources, management, technology and culture, the performance in non-financial aspects such as customers, internal management, learning and innovation has been further improved, it promotes the realization of the strategic objectives better. For the DyStar Group, the operation after the merger operation has been improved, too. Its ROE continues to increase and the profitability is gradually restored. Through this acquisition, we also find that the proper selection of a strategic partner, the clever strategy of bonds converted into shares and the effective integration after M&A are the main factors that affecting the performance of acquisition. With the promotion of national policies, combined with their clear ownership structure, smaller political risk as well as flexible and efficient decision-making mechanisms, the competitive advantage of private enterprises of Zhejiang in cross-border M&A has become increasingly prominent, the success rate of M&A has gradually increased. The positive effect which is brought by the cross-border M&A for business performance is also increasingly evident.The performance of cross-border M&A as the main line in this paper, the author explores the long and short term performance of cross-border M&A of private enterprises in Zhejiang pertinently, it enriches the theory of cross-border M&A of private enterprises. Finally, pertinently puts forward some suggestions which are beneficial to improve the cross-border M&A performance of private enterprise from two perspectives, one is the private enterprises own, from the following aspects:the early preparation, the implementation of process and integration; the other one is for the government departments, from the aspects as the supports of policy, the improvement of agencies, research and direction, it can increase the practical significance of the research of cross-border M&A.