Case playback:
A Limited by Share Ltd is one of China's largest consumer electronics groups, leading products include home appliances, communications, information, electrical engineering four categories. B Limited by Share Ltd is France's largest national group, the world's fourth largest consumer electronics maker, has more than 34000 CRT color TV patents, but in recent years has been in a state of loss. At the beginning of 2004, A M & B, expected CRT TV technology will greatly enhance the, color TV production ranks first in the world. But after the merger integration effect has not released, overseas color TV business serious losses and difficult to improve, become the heavy burden on the development path of A company.
Intensive analysis:
In recent years, the global M & a round and round, yet most M & A cases have ended in failure. Reasons for the failure of mergers and acquisitions business perplexing, each case has its special reason, but M & a decision-making process of the risk of not enough attention is one of the main factors of the failure of M & A. M & a decision-making risk mainly includes acquisition decision risk, market risk, business risk and risk screening preliminary talks in four aspects.
A. The main risk of acquisition
Violate the main qualification and principal-agent obligations two big main M & a risk exists M & a decision-making process. The laws of various countries have certain restrictions on the acquisition of subject qualification, if the violation will lead directly to the M & a failure. Such as, the laws and regulations of our country: one of the following circumstances, may not purchase: purchase listing Corporation have large amount of debt outstanding, maturity, and in continuous state; the acquirer in recent 3 years has serious violations of laws or suspected of being involved in any major illegal behavior; the acquirers are securities market discreditable behavior serious in recent 3 years; the acquirer a natural person, there is "company law" article 147th cases; the provisions of the laws, administrative regulations and the CSRC shall be Chinese acquisition of listing Corporation in other circumstances. Listing Corporation directors, supervisors, senior managerial personnel "company law" under the circumstances stipulated in article 149th, or in the last 3 years have bad credit records in the securities market, may not purchase the company.
In order to protect the principal-agent relationship, the laws of various countries general requirements for directors, supervisors, senior management personnel of a company have the duty of loyalty and duty of care. Such as, the laws and regulations of our country: the board of directors of the listing Corporation fails to perform the obligations of faithfulness and diligence, using acquisitions to seek the improper benefit, the China Securities Regulatory Commission to take supervision conversation, issuing a letter of warning of such regulatory measures, can be identified as improper candidates; listing Corporation involved in corporate control rights in violation of laws, administrative regulations and the provisions of "the acquisition of listing Corporation management measures" provisions, the China Securities Regulatory Commission shall be ordered to make corrections. But because of mergers and acquisitions in the short term can rapidly expand the business scale and business income, meet the characteristics of business operators and the agent's honor and interests, stimulate many enterprises do not according to their own circumstances blind acquisition. For example, mergers and acquisition in the absence of scale of economy; two sides of M & a resource sharing is difficult to achieve complementary lead to diseconomies of scale; financing improper influence the capital structure of enterprises and financial leverage; the placement of workers burden increase management cost and operation cost; reverse acquisition strategy to increase the cost of acquisition of the target enterprise. These merger may be able to improve performance in the short term, but in the longer term, may cause the enterprise performance decline or even losses, eventually will sacrifice the interests of shareholders and the company long-term sustainable development objectives.
B. market risk
Market selection, refers to the initial momentum provided by enterprises in the merger decision function, determine the allowed in the merger and acquisition ability of the activities within the scope of enterprises into the industry and regional. Scientific market to M & a more targeted acquisitions and collaborative measurement matching between the two sides, so as to improve the screening efficiency of target enterprises; conversely, if the market selection errors, means that enterprises from the beginning will deviate from the optimal trajectory, then no matter how precise matching and cooperative measurement, to find the target enterprise will deviate from the ideal state, at most, only is the best goal within the local range.
In the process of achieving the great-leap-forward development through M & A, Chinese enterprises also inevitably faced with the problem of market selection. But a lot of enterprises in the process of excessive optimism and self-confidence, are often vulnerable to short-term interests of the temptation and competitors are stimulated, ignore the law, greedy big, hot pursuit, resulting in deterioration of the waste of enterprise resources and value, even by the more severe punishment.
Such as, provisions of China's "anti-monopoly law": the state-owned economy occupies the control status of the relationship between the national economy and national security industry and to be exclusive of the industry, the State shall protect the lawful operation. The industry has a certain natural monopoly characteristics, with strong administrative monopoly color, usually exist in the form of state-owned and state-controlled, such as telecommunications, electricity, postal, oil, gas, aviation, railway, city water supply and heating supply, tobacco, salt, military etc.. In recent years, China has introduced a number of encouraging private capital into the administrative monopoly industry related policies, and to promote some of the industry investment and financing system reform, and achieved certain results. But for the private enterprises or foreign enterprises, there are still some prohibitions and restrictions.
"The acquisition of listing Corporation management measures" provisions: acquisition of listing Corporation and the relevant equity changes shall not endanger the national security and public interests. Acquisition of listing Corporation and the relevant equity change activity relates to the national industrial policy, industry access, transfer of state-owned shares and other matters, need to obtain approval of the relevant departments of the state, shall be carried out in the approved.
C. enterprise selection risk
Many of China's enterprises in the selection of merger and acquisition target, are the pursuit of scale and low cost, but ignore the purchase value, not a scientific attitude and do fine, bigger and stronger relationship. At the same time, because of the information asymmetry of the parties to the merger, many target enterprise assets are of poor quality, limited development potential, cultural differences and other phenomena, and M & A are entirely unaware of potential risks, the foreshadowing for future acquisitions fail.
D. preliminary negotiations risk
Preliminary talks in general do not have legal effect, but M & as too casual, very easy to cause the loss of commercial secrets or subsequent negotiations passive.
In this case, A, the hope that through mergers and acquisitions, can quickly upgrade the technology level and production scale, to achieve international entrepreneurship strategy. Development potential but for the traditional TV will gradually be replaced by flat-panel TV industry trends and B's lack of understanding, resulting in the production of the product to meet the needs of foreign consumers. Because the market selection and the inappropriate choice of target enterprises, A company not only can not effectively using B's technology and brand rapidly increasing market share, and a large amount of M & A costs and business losses become A's hard to carry the heavy, the development opportunities lost flat-panel TV makes A company in the market competition in a long period of passive.
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