State-owned enterprises mergers and acquisitions of financial problems and countermeasures

Abstract: The world within the increasingly fierce competition among enterprises, in order to improve our core competitiveness of state-owned enterprises, an effective way to integrate resources through mergers and acquisitions. To achieve economies of scale. The state-owned enterprises mergers and acquisitions financing decisions but the key to success link. article for state-owned enterprises in China M & A financing problems, the corresponding recommendations.

Paper Keywords: state-owned enterprises mergers and acquisitions financing
First, China's state-owned enterprises mergers and acquisitions financial problems
A slow development of capital market financing. In M & A practice, most of China's state-owned enterprises through the issuance of equity financing is a means of allotment of new shares and raise additional funds needed. Business is usually the first listed public offering to raise funds for acquisition of capital, or are some of the better performance of enterprises through share placement to raise funds the way, in preparation for the merger. But whether the stock issue of enterprises qualified and the provisions of the offering are more stringent, the amount of raised funds generally can not exceed the net assets of the previous year release twice the amount of listed companies to issue new shares to raise the amount of money generally can not exceed one year prior to the issue of net assets. coupled with China's capital market is in an adjustment phase. Systemic risk and policy factors can not be ignored, which have limited the state-owned enterprises financing development. resulted in only a small part of the business to take advantage of the means of acquisition financing.

2 loan financing application is limited. Bank credit funds of credit by banks tend to prefer short-term, low capital and operating philosophy and other aspects of planning restrictions, but resolved to some extent maintain and expand the company's normal production and business requirements, it is difficult in the enterprise M & A to play its due role. and according to relevant provisions of the financing through a bank loan payments can not be used by the secondary market for the stock acquisition of listed companies, generally used only for non-listed companies merger or acquisition of state shares can only be used , legal person shares. and bank mergers and acquisitions are often required to provide guarantees or loans need loans to certain business assets as collateral can be released. plus interest on loans is relatively high, so that enterprises can afford this loan is difficult, so bank loans in M ​​& A the role of finance is not great.

3 small proportion of bond financing. In our country to only focus on state-owned enterprises listed company or the company can issue bonds. Affect the general state-owned enterprises through the issuance of bonds to finance the factors, first, to issue bonds to go through complex examination and approval, and funding often leads to the time required does not match, the index of restrictions, the limited size of the issuer determines the choice of the number of limitations and limited funding. Second, the strict conditions for issuance of bonds in many state-owned enterprises will be exclusion from the bond financing of the door. Third, debt financing is difficult to pay for acquisitions. China's use of debt financing are clearly defined, enterprise funds raised by issuing corporate bonds not be used for real estate transactions, stock trading and futures trading, etc. has nothing to do with the enterprise production and management of risk investment. Equity M & A transactions involving stocks, and thus limit the terms of mergers and acquisitions for equity financing of corporate bonds issued. bond financing in M ​​& A The application is also very limited.

4 of merger & acquisition financing constraint by Laws and regulations. Because of the financial institution shall not provide loans for shares, and equity merger also belong to the scope of the stock exchange, which limits the bank to provide loans for the acquisition of the behavior of equity. And-debt financing there are also many restrictions, "Corporate Law> provides corporate enterprises bonds not exceeding a total aggregate net assets of the 40, the bond interest rate shall not exceed the limit of interest rates, etc.," Corporate Bonds Ordinance) provides that "the interest rate corporate bonds not be higher than bank deposit rates the same period 40% of household savings, these provisions on the issuance of bonds has played a significant role in the constraints. In general the risk of corporate bonds than the risk of bank deposits to a large, high level of risk is not high-yield expectations, corporate bonds, lost its appeal, coupled with active bond trading than stock trading, thus limiting the state-owned enterprises to finance.

5 non-standard operation is serious. As China's market economy system is not perfect, many mergers and acquisitions by government manipulation of behavior, not a corporate voluntary, but government action. Government acts on the intervention of the state-owned enterprises mergers and acquisitions are quite serious. The Government intervention, mergers and acquisitions in the calculation of different financing companies face when demand situation will be very different, some companies can lower the price of corporate acquisition targets, financing less pressure, while some enterprises may be relatively heavy financial pressure. The fair market impeding the development of finance, mergers and acquisitions also caused the other hand, the lack of proper motivation and autonomy, suppressed the inherent impulse to finance mergers and acquisitions. In addition the administrative control and other non-market means applications, it is difficult to ensure that the external financing of corporate mergers and acquisitions funding. The Government is only concerned about the financial needs of M & As, and mergers and acquisitions and corporate financial support after the operation due to lack of funds tend to affect the normal operation and integration of results. Links to free Download Center http://www.hi138.com paper II, the development of state-owned enterprises mergers and acquisitions financing proposal
An expanding financing channels. The source of financing is the first choice for financing mergers and acquisitions, use of internal funds for mergers and acquisitions, on the one hand does not increase the financial burden, financial risk, on the other hand not to give the market the impact of unfavorable factors of business value . in the acquisition of state-owned enterprises, it should be possible to raise a reasonable acquisition from internal resources, in addition to companies own funds, the use of corporate assets other than cash property rights other than replacement or property right, not only can reduce financing costs, reduce financial risk and can make an inventory of existing assets to achieve out in some areas to recover the debt, etc., the enterprise is extremely beneficial.

Secondly, to ensure control of M & A business and ensure growth in earnings per share of convertible under the premise of mergers and acquisitions. Disbursement of funds can not only solve problems, and can reduce the risk of the purchase price is overvalued, and merger integration risk, access to target company management support, and many other benefits, especially for large-scale mergers and acquisitions. now. Our most urgent need of expansion of large-scale state-owned enterprises do not have the financing to financial institutions or publicly release the conditions of operation of the use of convertible after all, a way of mergers and acquisitions good choice.

Again, the state-owned enterprises can take advantage of borrowing and issuance of securities (including bonds, equities and convertible bonds) and other financing channels. Choose this financing should be considered financial size, duration, cost, determine the optimal capital structure of enterprises. If the good capital structure requires equity financing, then using shares outstanding. or bank loans should be given priority, then consider issuing bonds.

2 development of the use of innovative financing tools. Compared with other countries. In the international M & A financing widely used in junk bonds, warrants, convertible bonds, preferred stock, notes and other financing tools are rarely used in China M & A financing, some mergers and acquisitions financing tools such as leveraged buyout bridge loans in the not perfect, but the absorption of foreign advanced means of financing, the state-owned enterprises should be the wise choice of M & A activity.

(1) equity leases. Guquan lease is a refers to all types as co-financing of the main buyers, to cooperate with the acquisition of acquired businesses, holding Mubiao companies intend to transfer all or part of shares. After the acquisition, investment and financing will be the main shareholdings the subject matter of the tenancy, the lease term and revenue by setting the way, and gradually transfer shares held by the acquirer to complete the merger. on the acquisition side, lease options can be simply attributed to the disposal of a lease of a buyback. the sale is acquirer in case of insufficient funds, will be unable to purchase the shares sold to financing institutions. At this point, the actual investment and financing institutions assumed the function of the financing for the acquisition side, in order to reduce pressure on the acquirer's acquisition of funds. investment and financing institutions as a transitional shareholders, not to the purpose of long term control of the equity, therefore, the purchaser must sign the lease and the buy-back contract. lease period, the purchaser can have enough time to schedule the funding and other lease expires, then this part of the formal repurchase shares over to complete the acquisition.

(2) bill financing. M & A transactions, financing through instruments rarely used in China. At present, our bill payment credit clearing function only limited tools, the financing function of the failure to be fully tapped.

Issuance finance than corporate bonds with greater flexibility in financing, can at any time based on market supply and demand of funds to different financing strategies and contingency measures. At the same time avoid the commercial paper financing and equity financing of other enterprises brought about the opportunity cost of increases. With notes of the management of progressive relaxation. note the gradual expansion of market participants, and notes the establishment of trading institutions, state-owned enterprises (especially large state-owned enterprises benefits are good) to try to use instruments of security, the sale and mortgage to financing, merger and acquisition activities in order to meet temporary financial needs. Links http://www.hi138.com Research Papers Download