Strategic Differences,Financing Structure And M&A Performance

The diversification and merger of enterprises have always been concerned.Scholars have conducted a lot of research on whether diversification and merger can bring positive benefits to enterprises(Gort,1962;Li shanmin,2006;Wei wei et al.,2017).Enterprises need capital support to adopt different strategies and carry out mergers and acquisitions,which are reflected in different financing structures among enterprises from the financial perspective.Since Modigliani and Miller(1958)put forward the capital structure model,the theory of financing structure has been greatly developed.Scholars have combined strategy and financing structure to study the impact of the two on enterprise value and performance.Select different strategies,will adopt different financing and mergers and acquisitions to achieve their own strategic goals.In this process,the strategy implementation of the enterprise also affects the asset composition of the enterprise(Penrose,1959),and the corresponding financing needs to be adopted to match,thus affecting the enterprise performance.Based on this,this paper takes the strategy as the starting point,combs the financing structure under different strategies and the impact of financing and M&A on enterprise performance,and compares and analyzes the two leading enterprises in the stationery industry--M&G and Comix group.With the development goal of "big office",Comix stationery co.,ltd.has adopted the diversification strategy.In recent years,it has frequently acquired Internet technology enterprises through its own capital,loan,and targeted financing,developed cloud video and Saa S software business,and carried out diversified operations.With the goal of "creating the first stationery brand",M&G adopts a specialization strategy and acquires pen companies and channel companies with its own capital.In terms of financing structure,due to the differences between strategy,merger and acquisition and financing,the asset-liability ratio of Comix is much higher than that of M&G and has higher financial leverage.However,the company size,operating income and net profit of the two enterprises are on the rise year by year,showing a good corporate performance.Study found that: under the different strategic choice,the enterprise will choose different financing and merger and acquisition to realize strategic target.Different strategies and M&A can form different financing structure.Enterprises with diversified strategies should have higher financial leverage and match the financing structure with high debt,while enterprises with specialized strategies should match the financing structure with low debt.Strategy,M&A and financing structure will also have an impact on enterprise performance.Enterprises that adopt M&A mode for diversified expansion tend to choose external financing.Equity financing is more conducive to the improvement of M&A performance,followed by debt financing,which is consistent with the research conclusions of Wu canglan(2006)and Zhai jinbu et al.(2011).The possible contributions of this paper are as follows: firstly,based on previous research results on strategic M&A,financing structure and M&A performance(Hoskisson and Hitt,1990;Jiang fuxiu and Lu zhengfei,2004;)Taking M&G and Comix group as examples,this paper discusses the financing structure and M&A performance of enterprises under different strategies and M&A,and enriches the relevant case study literature.Secondly,it can be used for reference to the enterprise strategy formulation,the choice of merger and acquisition,as well as the choice and adjustment of financing structure.