Mergers and acquisitions, better known as M&A accounting, have been growing in Germany for years. Especially the People's Republic of China, as an emerging economic empire, has great ambitions in this regard. In particular, the qualifications of the workforce, the good infrastructure and the stable political and legal framework make Germany a lucrative destination for Chinese investors. The focus is mostly on small and medium-sized enterprises (SMEs) with limited growth potential. According to a study by the Institute for Co-determination and Corporate Governance (I.M.U.), there have been a total of 243 takeovers of German companies between 2011 and 2020, even if this rate has recently declined sharply. Whether these mergers or takeovers by Chinese investors ultimately have a profitable impact and are reflected in the financial situation of the companies concerned - there has sometimes been a research gap about this without conclusive empirical evidence. Our MBA student Thu Thi Minh Nguyen examined the opportunities and risks of Chinese investments in German companies as part of her Master's thesis at OHM Professional School and came to a surprising conclusion.
Thu Thi Minh Nguyen analysed the financial situation of 19 affected companies in various sectors two years before and after the takeover by a Chinese investment. The focus was on the accounting data, which provided information on the actual company performance based on profitability, research and development costs, liquidity or the debt ratio. Their findings show that financial performance has indeed neither significantly improved nor deteriorated during the period under review. Although the individual performances differ after mergers and acquisitions due to different company-specific objectives, the result thus contradicts the prevailing and often widespread public fears about a deterioration of the financial situation after Chinese participation. The small number of studies on Chinese M&As in Germany so far, which were based on subjective perceptions, also supported the public view. Thu Thi Minh Nguyen's research henceforth offers guidance with clues for companies facing an impending takeover or merger. With the knowledge of the company's own position, corresponding comparison parameters and current trends, possible defence strategies can be prepared or a suitable basis for negotiation for advantageous transactions can be worked out.
