Mergers and acquisitions can be divided into horizontal mergers and acquisitions, vertical mergers and acquisitions and mixed mergers and acquisitions.
1, horizontal integration. Horizontal integration refers to being in the same industry. Mergers and acquisitions between enterprises that produce similar products or similar production processes. This kind of merger and acquisition is essentially the concentration of capital in the same industry and department, which rapidly expands the scale of production, increases market share and enhances the competitiveness and profitability of enterprises.
2. Vertical mergers and acquisitions. Trial production of mergers and acquisitions between enterprises with closely related production and operation processes. Its essence is to achieve vertical integration through mergers and acquisitions between enterprises at different stages of producing the same product. Vertical M&A can not only expand the production scale and save the same cost, but also promote the close cooperation of all links in the production process, speed up the production process, shorten the production cycle and save transportation, storage costs and energy.
3, mixed mergers and acquisitions. It refers to mergers and acquisitions between enterprises in different industrial sectors and different markets, and there is no special production technology connection between these industrial sectors. Include three forms:
(1) product expansion mergers and acquisitions, that is, mergers and acquisitions between enterprises that produce related products;
(2) Market expansion mergers and acquisitions, that is, in order to expand the competitive region, enterprises conduct mergers and acquisitions in other regions that produce similar products;
(3) pure mergers and acquisitions, that is, mergers and acquisitions between several enterprises that produce and operate unrelated products or services.
Mixed mergers and acquisitions can reduce the business risks brought by enterprises' long-term engagement in a certain industry. In addition, in this way, various resources such as technology and raw materials can be fully utilized.
From whether it is divided by intermediaries, corporate mergers and acquisitions can be divided into direct acquisitions and indirect acquisitions.
1, direct acquisition. It means that the acquisition company directly asks the target company for merger and acquisition, and the two sides reach an agreement through consultation, thus completing the acquisition activities. If the acquisition company claims part of the ownership of the target company, the target company may allow the acquisition company to obtain the newly issued shares of the target company; If all property rights are needed, both parties can negotiate to determine the way of ownership transfer. In the case of direct acquisition, the two parties can cooperate closely, so the relative cost is lower and the possibility of success is greater.
2. Indirect acquisition. The acquisition company directly acquires the shares of the target company in the securities market, thus controlling the target company. Because indirect acquisition is easy to cause the stock price to rise sharply, and may cause the fierce reaction of the target company, thus increasing the cost and difficulty of acquisition.
According to the motives of acquiring companies, it can be divided into bona fide mergers and acquisitions and malicious mergers and acquisitions.
1, acquisition in good faith. After the acquisition company puts forward the acquisition conditions, if the target company accepts the acquisition conditions, this merger is called friendly merger. In the case of friendly merger, the terms, price and method of acquisition can be negotiated by the senior management of both parties and approved by the board of directors. Because both sides have the desire to merge, this method has a high success rate.
2. Malicious mergers and acquisitions. If the target company does not agree to the acquisition requirements and conditions after the acquisition company puts forward them, the acquisition company can only forcibly acquire them in the securities market, which is called malicious acquisition. Under hostile takeover, the target company usually takes various measures to resist the takeover, the securities market will react quickly and the stock price will rise rapidly. Therefore, unless the acquiring company is strong, hostile takeover is difficult to succeed.
The process of M&A can be divided into cash acquisition, stock acquisition and comprehensive securities acquisition according to different payment methods.
1, cash acquisition. Refers to the acquisition company to pay a certain amount of cash to the shareholders of the target company to obtain the ownership of the target company. There is a capital income tax problem in cash acquisition, which may increase the cost of acquiring companies. Therefore, when adopting this method, we must consider whether the acquisition is tax-free. In addition, cash acquisition will have an impact on the liquidity, asset structure and liabilities of the acquiring company, so it is necessary to weigh it comprehensively.
2. Stock acquisition. Refers to the ownership of the acquisition company by issuing shares or acquiring the target company. In this way, the company does not need to pay cash to the outside world, so it will not affect the company's financial situation. However, holding more shares will affect the ownership structure of the company, and the control rights of the original shareholders will be affected.
3. Comprehensive securities acquisition. Refers to the acquisition process, the acquisition company not only pays cash and shares, but also includes warrants, convertible bonds and other mixed methods. This merger has the characteristics of cash acquisition and stock acquisition. Buying a company can not only avoid paying too much cash, maintain a good financial situation, but also prevent the transfer of control. In the fierce market competition, enterprises can survive only by continuous development. Under normal circumstances, enterprises can develop through internal investment and mergers and acquisitions. Compared with the two, mergers and acquisitions are more efficient, mainly in the following aspects:
1, merging can save time. The operation and development of enterprises are in a dynamic environment. While enterprises are developing, competitors are also seeking development. Therefore, we must seize the opportunity in the development process and try our best to gain a favorable position before our competitors. If an enterprise adopts internal investment, it will be limited by the project construction cycle, resource acquisition and allocation, thus restricting the development speed of the enterprise. Moreover, through mergers and acquisitions, enterprises can expand their scale, improve their competitiveness and beat their competitors in a short time. Especially in the case of entering a new industry, whoever walks first will gain advantages in raw materials, channels and word of mouth and quickly establish a leading edge in the industry. Once the advantage is established, it is difficult for other competitors to replace it. In this case, it is obviously impossible to meet the needs of competition and development through internal investment and gradual development. Therefore, mergers and acquisitions can enable enterprises to seize opportunities, win opportunities and gain competitive advantages.
2. M&A can reduce the barriers to entry and the risk of enterprise development. Enterprises entering a new industry will encounter various barriers, including capital, technology, channels, customers, experience and so on. These barriers not only increase the difficulty for enterprises to enter this industry, but also increase the cost and risk of entry. If enterprises adopt the way of merger and acquisition, and control the original enterprises in this industry first, they can bypass this series of barriers, which is the development of this industry, so that enterprises can quickly enter this industry with lower costs and risks.
In particular, some industries are limited by scale, and enterprises must reach a certain scale to enter this industry, which will inevitably lead to overcapacity and fierce resistance from other enterprises, and product prices may drop rapidly. If the demand cannot be improved accordingly, the entry of this enterprise will destroy the profitability of this industry. Entering this industry through mergers and acquisitions will not lead to a substantial expansion of production capacity, thus protecting this industry and making enterprises profitable after entering.
3. M&A can promote the transnational development of enterprises. The pattern of competitive globalization has basically taken shape, and transnational development has become a new trend of management. Enterprises entering new foreign markets face more difficulties when entering new domestic markets. It mainly includes: enterprise management mode, differences in business environment, restrictions of government regulations and so on. Merger and acquisition of an existing local enterprise can not only speed up the entry, but also make use of the operating system, operating conditions and management resources of the original enterprise to make the enterprise develop smoothly in the future. In addition, because the merged enterprise is closely integrated with the economy of the entering country, it will not have much impact on the economy of the changing country, so there are relatively few government restrictions. This contributes to the success of transnational development. After the merger, the collaboration between the two enterprises is mainly reflected in: production collaboration, management collaboration, financial collaboration, talent and technology collaboration.
1, production collaboration. The production synergy after enterprise merger and acquisition is mainly obtained through factory scale economy. After the merger of enterprises, the assets between the original enterprises, that is, the scale, can be adjusted to achieve the best scale and reduce production costs; The same products between the original enterprises can be produced by special production departments, thus improving the specialization of production and equipment and improving production efficiency; After M&A, the original production process or interconnected processes can strengthen the cooperation of production, make the production go smoothly, and also reduce the transportation and storage costs of intermediate links.
2. Business collaboration. Business cooperation can be achieved through economies of scale of enterprises. After the merger and acquisition, the management organization and personnel can be streamlined, so that the management cost can be shared by more products, thus saving the management cost; The original marketing network and marketing activities of enterprises can be merged to save marketing expenses; R&D costs can be shared by more products, so that new technologies can be quickly adopted and new products can be introduced. After the merger, due to the expansion of the enterprise scale, it can also enhance the ability of enterprises to resist risks.
3. Financial coordination. After the merger, enterprises can allocate funds in a unified way to enhance the utilization effect of enterprise funds. Due to the expansion of scale and strength, the financing ability of enterprises can be greatly enhanced to meet the demand for funds in the process of enterprise development. In addition, the merged enterprises can make up for each other's losses because of unified accounting treatment, thus achieving the effect of tax avoidance.
4. Collaboration of talents and technology. After the merger, you can enjoy the talents and technology of the original enterprise, give full play to the role of talents and technology, and enhance the competitiveness of enterprises, especially some bricks have technology, which is difficult for enterprises to obtain by other means. Through mergers and acquisitions, because of the control of the enterprise, the patent or technology that promotes the development of the enterprise has been obtained. Mergers and acquisitions are of great significance to the development of enterprises, but from the actual situation, many mergers and acquisitions are failures. In order to ensure the success of corporate mergers and acquisitions, we should pay attention to the following issues:
Select the target company under the guidance of enterprise strategy
Before M&A, it is necessary to define the development strategy of the enterprise, and on this basis, investigate the business and resources of the target enterprise. If we can coordinate well with the strategy of the acquired enterprise, enhance the strength of the enterprise through the acquisition of the target enterprise, improve the operational efficiency of the whole system, and finally enhance the competitive advantage, then we can consider the acquisition of the target enterprise. On the other hand, if the target enterprise and the development station of the enterprise are not quite consistent, then even if the target enterprise is cheap, we should be cautious, because after the acquisition, it will not only distract the buyer's power through cooperation, resource sharing or competitive advantage, but also reduce its competitiveness, which will eventually lead to the failure of the merger.
Before the merger, the target enterprise should be examined in detail.
Many mergers and acquisitions fail because the target company has not been thoroughly examined in advance. In the process of M&A, due to information asymmetry, it is difficult for the buyer to have a full understanding of the target enterprise like the seller, but many acquirers take it for granted that they already know the target enterprise like the palm of their hand in advance, which has played a great role in eradicating the target enterprise through good operation. However, after the acquisition process, many enterprises found that the facts were not as expected. The target enterprise may have major problems that have not been noticed. The previously envisaged opportunities may not exist at all, or it is difficult to integrate the corporate culture, management system and management style of both parties. Therefore, it is difficult to integrate the target company into the operation system of the whole enterprise, which leads to the failure of merger and acquisition. In the process of mergers and acquisitions, the strength of the acquirer has a great influence on the success of mergers and acquisitions, because in mergers and acquisitions, the acquirer usually has to pay a lot of cash, which must be supported by the strength and good cash flow of the enterprise, otherwise the enterprise will borrow on a large scale, leading to the deterioration of its financial situation, and it is easy for the enterprise to go bankrupt because of heavy interest burden or failure to repay the principal at maturity, which often happens in mergers and acquisitions.
Quickly and effectively integrate the target enterprise after merger and acquisition.
After the target company is acquired, it is easy to form a chaotic situation, especially in the case of malicious acquisition, which leads to many managers leaving their jobs, customer loss and chaotic production, so it is necessary to integrate the target company quickly and effectively. Stabilize the operation of the target company by sending senior managers to the target company, and then integrate all aspects. Among them, the integration of corporate culture is particularly important, because many studies have found that many failures of mergers and acquisitions are caused by poor integration of corporate cultures of both parties. Through the integration of the target company, its operation will return to the right track and effectively cooperate with all parts of the whole enterprise operation system.