Its purpose is manifold:
(1) Seek opportunities for enterprises to gain profits from idle funds through financial investment.
(2) Through financial investment, the business risks of enterprises are dispersed.
(3) through financial investment, improve the liquidity of assets and enhance the solvency of enterprises.
(4) For enterprises, financial investment can be used as both hedging and speculation.
(5) Financial investment is also an important means to achieve enterprise expansion. One of the signs of the success of an enterprise or company is to see whether it has developed in the course of operation, and the specific embodiment of development includes outward expansion, that is, merger and acquisition of other enterprises and reorganization of the company.
Merger usually refers to the economic behavior that an enterprise purchases the property rights of other enterprises to achieve complete control over its management rights (also called absorption merger), or two or more enterprises merge to form a new enterprise (also called establishment merger). Acquisition means that an enterprise purchases part of the assets or part or all of the equity of another enterprise in order to control the latter's operation.
The main differences between merger and acquisition are:
The acquired enterprise will lose its legal personality, and the acquired party will usually not change its legal status.
However, there are similarities between them, both of which are aimed at gaining control over other enterprises and realizing the expansion and development of this enterprise.
Merger and acquisition, referred to as merger and acquisition, can be divided into four ways: purchase, debt collection, share absorption and holding. In China, M&A is mainly about absorbing shares and holding shares. Enterprises can control other enterprises to a greater extent and implement their own enterprise development strategies through financial operations aimed at obtaining control rights.