The Influence Of Acquired Firm's Shareholder Participation In Fund Raising On M&A Premium And Performance

Since the establishment of China's capital market,listed companies have set off several rounds of mergers and acquisitions.In recent years,the phenomenon of high premium M&A is increasing,but the performance after high premium M&A is not always satisfactory.One of the important reasons for the high premium and the poor performance after the merger is the serious information asymmetry between the two parties in advance of the merger and the resulting agency problem.Therefore,how to alleviate information asymmetry and agency problem has been a hot topic in the field of M&A research.This article selects Shenzhen Liantronics' s acquisition of Time-sharing Media as the research object is found that the acquired firm's shareholder is very rare to be involved in the merger and acquisition fund raising,which usually were the controlling shareholders or all kinds of financial institutions.This paper makes a case analysis from three aspects: the motivation of introducing the major shareholders of the acquiree into the acquisition fund raising of the merger,the influence on the premium rate of the acquisition,and the economic consequences.First of all,it is found that the introduction of the major shareholders of the acquiree in the capital raising of the merger and acquisition can solve the difference in payment preference among different shareholders of the acquiree.At the same time,under this arrangement,after the completion of the merger and acquisition,the largest shareholder of the acquirer becomes the major shareholder of the acquirer,which is helpful to alleviate the principal-agent problem in the future operation.Secondly,this paper analyzes the influence of this special acquisition arrangement through three aspects,which are vertical comparison,comparison of comparable transactions and premium rate of industry assets.The result shows that,in this transaction arrangement,the major shareholders of the acquiree and the acquirer have a more consistent interest orientation,which helps to alleviate the problem of information asymmetry,and the merger premium is significantly lower.Thirdly,through the analysis of the cumulative excess return rate(CAR)of the case company and comparable M&A transactions,it is found that the market of this transaction arrangement responds positively,indicating that the arrangement of M&A fund raising has been fully recognized by the market.Finally,through the analysis of longitudinal performance change of Time-sharing Media and comparative merger event,we find that since the largest shareholder of the acquirer accepted the lock-up period to raise funds for the acquisition for three years,which tended to align with the interests of the acquirer's shareholders,alleviated the agency problem after the merger,and thus showed relatively better accounting performance.In addition,this paper also investigates the long-term performance of the acquirers,which found that from 2013 to 2017,the performance experienced a trend of first rising and then falling.However,as the acquirer carried out a series of mergers and acquisitions,the changes in the acquirer's performance are difficult to reflect the impact of the acquisition of Time-sharing Media as a single merger and acquisition event.How the acquirer can effectively integrate a series of mergers and acquisitions is the main problem.