Research On The Motivation And Consequence Of Tianguang Fire Protection’s Cross-border Merger And Acquisition Of Agriculture-related Enterprises

In order to accelerate the transformation of economic development mode and structural adjustment,and optimize the industrial structure,The State Council issued the Opinions on Promoting Enterprise Merger and reorganization on September 6,2010,to strengthen the guidance and policy support for enterprise merger and reorganization.The policy has provided a good external environment for enterprise merger and acquisition.Enterprises through mergers and acquisitions to achieve rapid integration of resources,to provide strong support for the transformation and upgrading of enterprises.However,at the same time,the number of failed mergers and acquisitions is also increasing.More and more enterprises blindly carry out diversified mergers and acquisitions without considering their actual conditions,which will eventually lead to goodwill impairment and corporate financial condition deterioration due to failure to fulfill performance commitments,and increase the risk of corporate bankruptcy.Based on this,this paper chooses Tianguang Fire Protection merger and acquisition of agriculture-related enterprises as a case to study the motivation and consequences of the merger.Firstly,the research background and significance of this paper are expounded,and the research literature on the motivation,consequence and valuation of cross-border M&A by domestic and foreign scholars is reviewed and summarized.The concepts of M&A and enterprise valuation are defined,and the theory of diversification strategy,efficiency theory,manager overconfidence theory and information asymmetry theory are taken as the theoretical basis of this study.Secondly,it introduces the basic situation of the two sides of the merger and acquisition,and analyzes the motivation of the merger and acquisition from three perspectives: the bottleneck of the original business of the merger and acquisition party,the broad market space of the industry of the merger and acquisition party and the encouragement of the state.The consequences of the merger and acquisition of Tianguang Fire Protection are summarized from five perspectives: the development bottleneck of the enterprise has not broken through,the financial condition of the enterprise has deteriorated,the large goodwill impairment has been generated,the major shareholders have reduced their holdings to cash out,and the stock price has fallen leading to delisting.Finally,from the analysis of each link of M&A,it is found that the main reasons leading to the failure of M&A are: blind cross-border M&A of agriculture-related enterprises,insufficient ability of the acquirer,weak profitability of the acquired party,high valuation and high pricing of agriculture-related enterprises,poor integration effect after M&A,and the reduction of major shareholders to increase the financial risk of enterprises.Through the research,the following conclusions are drawn: first,the cross-border merger and acquisition of Tianguang Fire Protection did not produce synergistic effect;Second,the high valuation and high performance commitment of agriculture-related enterprises affect their sustainable development;Third,the valuation is not in line with the reality is the important reason for the failure of Tianguang fire merger.Based on this,we can draw the following enlightenment: first,we should carefully implement cross-border mergers and acquisitions;Second,the good operation condition of enterprises is the premise of merger and acquisition;Thirdly,the selection and valuation of target companies are the key to M&A.Fourth,increase the diversity of performance commitment indicators is the guarantee;Fifth,strengthening post-merger integration is the key.