The Dynamics of M&A Strategy

Chinas banking sector has witnessed significant inbound M&A traffic by developed market banks in recent years. At the same time, Chinese banks have risen to become some of the worlds biggest banks. Along with these massive market values and financing capabilities have come global ambitions culminating in first outbound M&A moves. This study exploratively researches the relationship between developed market banks inbound M&A into China and Chinese banks outbound M&A. Based on a conceptual discussion, case studies and expert interviews an explanation model is developed outlining the drivers and barriers of Chinese banks outbound M&A and the factors in the inbound-outbound relationship. This model enables developed market banks to analyse potential M&A reactions by incumbents. Finally, dynamic M&A market entry strategies are derived, which explicitly account for future incumbent outbound M&A moves.