The profit principle of enterprise merger and acquisition, also known as the efficiency principle, is manifested in two aspects:
1, M&A's income is greater than M&A's cost, or M&A's activities can reduce or avoid losses and costs.
2. Choose the best scheme among several feasible M&A schemes. Obviously, the negotiation of the merger price is undoubtedly to achieve the expected purpose. Both M&A parties must follow this basic principle in pricing activities to meet the basic requirements of advantages outweighing disadvantages and selecting the best. Any merger that deviates from this principle can be said to be a failed or inefficient merger.
Second, the principle of synergy.
Another basic principle to be followed in enterprise merger and acquisition is to achieve synergy. Synergy effect means that the overall effect of the enterprise after the merger is greater than the sum of the effects of the enterprise operating alone before the merger, that is, the so-called "1+1>; 2"。 Collaboration mainly includes management collaboration and management collaboration. Business synergy refers to the change and improvement of the efficiency of production and operation activities brought about by mergers and acquisitions. The synergistic effect of management is mainly reflected in three aspects: market size, complementary advantages and reducing uncertainty.
1, economies of scale
The direct manifestation of enterprise merger and acquisition is the emergence of larger enterprises or new organizational forms. Within the reasonable boundary of the enterprise, due to the expansion and growth of market share and sales volume, the market control ability is expected to be improved, and the improvement of product price, production technology, fund raising and customer behavior will also contribute to the survival and development of the company. However, the average cost will be reduced, and correspondingly, after the marketing expenses, R&D expenses and operating costs of new enterprises are shared equally, they will also show a downward trend due to the scale effect.
2. Complementary advantages
Through mergers and acquisitions, the advantages of enterprises are integrated with each other to achieve the purpose of learning from each other's strong points and may also produce new advantages. These advantages include not only the original company's expertise in technology, market, patent and product management, but also its excellent corporate culture and rich and favorable social resources, which complement each other and improve the efficiency of factor combination.
3. Reduce uncertainty or risk.
The activities of enterprises in the market will face many uncertainties, and the information cost and transaction cost will inevitably be paid to resolve the risks. Merger and acquisition can change the market transaction relationship into the internal relationship of the same company, thus reducing the cost by enjoying resources in marketing expenses, transaction tax, information collection and so on. Of course, the company's transaction costs are greatly reduced. The pursuit of saving transaction costs is the fundamental motivation of vertical mergers and acquisitions, and the substitution of internal administrative management for market transactions can also effectively reduce the phenomenon of default. The reliability of production is enhanced, and the uncertainty will be reduced to some extent.
Third, the principle of compatibility
The principle of compatibility refers to the harmony between enterprises, between production and sales and consumers, between enterprises and society, in harmony with system, environment and culture, promoting change and evolution, advocating progress and civilization, and promoting the construction of a harmonious society. Collaboration focuses on the overall improvement of business management after mergers and acquisitions; The principle of compatibility is more about the integration with the external environment after merger and acquisition. Generally speaking, the compatibility between an enterprise and the external environment and the social responsibility it should bear are difficult to be reflected in the enterprise value, and can only be reflected through the price. The higher the degree of integration with the environment after M&A, the better the development and growth, the stronger the expected profitability, and M&A enterprises are willing to pay higher prices for it. or vice versa, Dallas to the auditorium
Fourth, the principle of comprehensive strength enhancement.
Through enterprise merger and acquisition, with capital as the link and asset reorganization as the way, the overall strength of corresponding industries, markets and national economy has been enhanced. The determination of M&A price of enterprises should take into account the improvement of comprehensive strength of enterprises, have a global and long-term perspective, and consider it from the strategic height of the healthy development of the whole economy and the improvement of productivity. The determination of price is a partial and short-term focus, which should be combined with the long-term development of enterprises in the whole economy. It can truly achieve the purpose of effective capital expansion, rational resource allocation and overall strength improvement.
Because the pricing of M&A directly affects the success or failure of M&A, the person in charge of M&A should operate according to the pricing principle of M&A.. Through the correct operation, the strength of the merged companies will be enhanced, and the merged companies will be integrated with each other to achieve economies of scale. This is also the basic starting point and purpose of corporate mergers and acquisitions.