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development, though. There is no scientifically grounded base of internal audit in government sector. At present it is extremely essential to stop applying old mechanisms of control which are rather cost-consuming and to start applying modern mechanisms which are more efficient. It is vitally important to work out documentation on development and implementation of internal audit in Federal Treasury of the Russian Federation.
Improvement of treasury risk management is of great importance. A treasury risk is a possibility of events which may have a negative impact on all the processes of activities carried out by the departments of Federal Treasury and/or influence the process of meeting the objectives and cause the loss of financial and material resources. To pro-
vide efficient control of treasury risk management it should become a continuing process and should be a part of modern management. In this respect a Regulation on treasury risk management should be developed and approved.
1. Strategy of Development of Internal Control and Audit in Federal Treasury in 2006 - 2011 // Decision of Collegiate Organ of Federal Treasury dated 23.12.2005. № 1/1 // URL: http:// www.simtreas.ru/na/Conc_06-11 .htm.
2. Korovina E.B. On the Issue of Efficient Finance Spending // Finances. 2004. № 11. P 57 - 58.
3. Nesterenko T.G. On Development of Federal Treasury // Finances. 2005. № 12. P. 18 - 20.
4. Prokofiev S.E. On the Increase of Federal Treasury Functions Expanding // Finances. 2003. № 9. P 20 - 21.
удк657.6 A.V. Sonnikova
ANALYSIS OF AN ENTERPRISE WHICH IS AN OBJECT FOR A MERGER AND AN ACQUISITION
Methodology of an enterprise activities analysis preventing a merger or an acquisition is presented. This analysis serves as the instrument for corporate finance management at the market for corporate control.
Key words: market for corporate control, mergers and acquisitions, poison pills, methodology of transaction analysis.
A.B. Сонникова
АНАЛИЗ ОРГАНИЗАЦИИ КАК ОБЪЕКТА СДЕЛКИ ПО СЛИЯНИЮ И ПОГЛОЩЕНИЮ
Статья содержит авторскую методологию анализа деятельности предприятия, которая поможет предотвратить поглощение организации. Данный анализ является инструментом управления финансами корпорации на рынке корпоративного контроля.
Ключевые слова: рынок корпоративного контроля, слияния и поглощения предприятий, защитные меры, методология анализа сделок.
In modern conditions only 35% of cases of corporate restructuring at the market for corporate control have been successful [2]. One of the reasons for that is the lack of well-grounded and developed techniques in the sphere of preliminary analysis. There are many works on the principles of transaction of mergers and acquisitions (M&A) as on the results of these transactions, though. The majority of these works reveals the process of transaction reorganization, approaches to management of the integrated company structure [3]. Much attention is paid to relevancy, efficiency and motivation of these transactions [1]. Financial management of a public corporation should have a set of analytical instruments which assesses the possibilities of an enterprise to become an object for an M&A transaction. Firstly it will enable to objectively assess the market value in the process of M&A transactions. Secondly, it will reveal the possibilities to determine poison pills.
To analyze conditions for M&A transactions both foreign and national scientists have worked out a number of models which enable to carry out diagnostics of an enterprise:
- model of six cells of M. Vaysbord, analysis of which enables to clarify the main aspects of the enterprise activity;
- model 7S's of McKinsey which allows to evaluate competitive advantages of the company;
- model of Burke-Litwin which considers an enterprise as an open system intended for analysis of organization changes.
The main disadvantage of these models is the fact they are static while all the processes and occurrences in economy are dynamic and constantly develop.
From the viewpoint of the market for corporate control the assessment of possibility and relevancy of M&A transactions at different stages of a company life cycle suggested by D.A. Endovitsky and V.E. Soboleva is interesting [2]. Theory of life cycles and the study of different processes in economy on the basis of these cycles are popular. For example, in his works I. Adizes considered life cycles and determines the value which expresses the interrelation between the parameters “flexibility” and “control”. [5]. Later D.A. Endovitsky and V.E. Soboleva proposed their own idea taking the theory of I. Adizes as a basis. They defined that value as market value of an enterprise. Market value best defines flexibility ability to quickly react to changes in market environment along with control and management function.
In their works on evaluation of market value of enterprises F.C. Evans and D.M. Bishop point out the necessity for external and internal analysis of the activities within the framework of corporate control [3]. However, the scientists consider the importance of this analysis in respect to new
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high-tech enterprises and propose another analysis aimed at prognosis within only one enterprise. But such enterprises do not have a long history of operation and it complicates the prognosis. As it is known prognosis is usually based on the analysis available which is impossible in this case. Besides, new enterprises rarely become objects for a M&A transaction because transactions of this kind are very risky. From this standpoint enterprises having a long history of operation with a big population of machines and equipment but inefficient management are more attractive for M&A transactions.
It is our understanding that analysis of M&A transactions should be based on systemic analysis of factors determining this process. Let us take two enterprises as an example - “A” public company and “B” public company -because there are usually two enterprises participating in M&A transactions. Each of these companies functions separately and has its own management system. Assuming that “A” public company is an object for a M&A transaction, managerial team of which we are representing. “B” public company is considered to be the enterprise which is going to be a buyer. In the result of this possible transaction a new “C” public company will be formed.
Analysis within the framework of the market for corporate control from the viewpoint of us, the managerial team of “A” public company, will be the following:
1) analysis of internal environment of “A” public company;
2) analysis of external environment of “A” public company;
3) valuation of the market value of “A” public company;
4) analysis of internal environment of “B” public company;
5) analysis of external environment of “B” public company;
6) prognosis of internal environment of “C” public company;
7) prognosis of external environment of “C” public company.
The basis for any decision made by the managerial team of a company should be economic analysis of this enterprise economic activity. Accounting-based data obtained are necessary for implementation of the first stage of the analysis. The following should be done:
• to carry out analysis of form of balance sheet 1 “Balance” and form of balance sheet 2 “Statement of Income and Expenditure” for the previous five years;
• to evaluate solvency ratio, financial soundness indicators, efficiency and profitability ratios;
• to analyze profit returns by means of valuating composition and structure of receipts; sales revenue and volume of sales; company pricing policy; composition and structure of company expenditures; cost analysis of turn out products;
• to investigate key figures of financial planning and budgeting for the next five years;
• to study dividend policy of the company;
• to analyze value, structure and fluidity of the company securities;
• to valuate the market value of the company using all possible approaches (profit, cost, market driven).
In general, this stage is a detailed economic analysis of the company activities for five years prior to the present moment and prognostic analysis for the future. Implementation of this stage of analysis presents no difficulties because all analytical collected data except for the market
value of the company are constantly revised by the company economists.
Analysis of internal factors is necessary at the market for corporate control for the managerial team of the company. For example, assessment of financial status and accounting control allow finding out the data on relationship of receivables and payables which are interesting primarily for the buyer. Condition and depreciation of assets mean investment prospects of “A” company as an object for a M&A transaction. Shares of the company at the stock market are analyzed in the similar way. Technological possibilities and advantages define the company competitiveness at the market for corporate control.
Implementation of the second stage of analysis is a demanding but an informative process. It includes macro-and meso-level analysis.
1. Evaluation of the general economic situation of the country. In economic slowdown and crisis the necessity for amalgamation of enterprises may arise to make them more competitive. In economic recovery there may be a risk of acquisition. In foreign capital infusions to the country “A” company can invite complementary investments. That is the reason for assessing not only economic situation of Russia but its development in globalization (GDP index, assessment of production values in the country, investment analysis, social and budget indicators, currency quotation).
2. Analysis of the country stock market development. Necessity for this analysis can be explained by the fact that a public company is an active and mandatory participant in the stock market. At this stock market development can ease the mechanisms of M&A transactions and on the contrary, factors putting back transfer of securities slow down the processes of public companies reorganization.
3. Analysis of rate of inflation at the market for corporate control. M&A processes are specific and unique “economy” with the same macroeconomic processes. It means that optimistic prognosis for future M&A transactions may lead to price advance and on the contrary, conditions for reorganization processes “freezing” lead to price reduction of a M&A transaction. Besides, enterprise consolidation may be the reason for a certain monopoly at the market for corporate control either in one branch or the whole country.
4. Analysis of impact on M&A transactions in bank and financial and credit sphere of the country. Firstly, availability and economic relevance of bank products may produce excesses of investments in the bank sphere thus drawing away investors from investments into enterprises. And alternatively the decease in the number of investment offers in financial and credit system and their availability leads to greater volume of investment in property complexes and industrial enterprises.
5. Evaluation of legal laws and administrative barriers. Provided that macro- and meso-level analysis is considered, analysis of legislative drafts should be carried out within the country, its region and its sphere of economy. As reorganization of an enterprise is a process which touches upon assignment of property, judicial barriers can play the leading role in M&A transaction settlement. These barriers can also be used as poison pills.
6. Analysis of the sphere where the enterprise operates and functions and spheres allied in productive processes (sale markets, raw material suppliers). This analysis should contain all-Russian, regional and local informa-
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tion. The necessities for this analysis within the framework of corporate control is explained by the fact that the buyer would probable operate in the same or the allied spheres. Precisely this analysis will surely suggest the enterprise which should be an object for a M&A transaction.
7. Analysis of the market of M&A transactions in the Russian Federation. At this stage it is advisable to follow-up take-over offers over a five-year period. Then analysis of the accomplished transactions in the given sphere, their volume, changes in capital structure should be made. This is important from corporate control viewpoint. Reasons for failed transactions should be revealed whether the reason was in timely carried out poison pills, denunciation made by the buyer or changes in national measures.
After internal and external analysis of “A” public company is completed, it is necessary to valuate market value of the enterprise. The third stage of the analysis is implemented within three approaches - market driven, profit and cost approaches. For a managerial team it is easier to determine the prospective buyer or an enterprise which is the best option for a take-over when valuating the market value of their own company.
The fourth and the fifth stages of the given analysis are identical to the first and second ones of another enterprise managed by another managerial team. That is the reason it is more difficult to perform. Data on internal economic status of an organization can be obtained from the sources with an open access (public financial statement). It is also possible to use inside information in case there is access to it. External constituent of an enterprise activity of “B” public company will most probably be identical to the one of “A” public company with adjustment to individual specific features of activities. This is due to the fact that, as a rule, enterprises involved in M&A transactions are the same in terms of productivity sphere and location. So their external factors are the same. However, in modern real conditions there is a tendency to an increase in foreign investments into industrial enterprises of Russia, in na-
tional investments from Moscow and Saint-Petersburg into regional industrial enterprises. This cannot but influence specific features of company activities. Our example considers only one enterprise, “B” public company. In practice there may be several enterprises. Some of them may be considered as buyers, others as eligible objects for takeovers. The more options suitable for “B” public company and more options for possible development within the limits of M&A transactions the managerial team of an enterprise has, the more poison pills the enterprise has. This means strengthening of positions at the market for corporate control and enhancement of managerial team position from the viewpoint of both holders and competitors.
The sixth and the seventh stages of analysis are prognosis for development of the enterprise built up after reorganization. This prognosis should be practically identical to the schemes of the first and the second stages of the analysis.
In summary, one of the most important tasks of the managerial team of a company should be working out poison pills and making a balanced and timely decision on the company reorganization.
1. Barulin S.V., Kusmartzeva V.S. Assessment of Results Rating and Efficiency of Long-Term Targeted Programs Implementation // Finances. 2010. № 5.
2. Endovitsky D.A. Economic Analysis of Merger and Acquisition Transactions. M.: Publishing House KNORUS, 2008.
3. Evans Frank C., Bishop David M. Assessment of Companies in Mergers and Acquisitions: Creation of Value in Private Companies / Translation from English, 2nd edition. M.: Publishing House Alpina Business Books, 2007.
4. Romanenko O.A. Development of Theory of Integration and Defining Its Significance for Finance Management of an Economic Entity // Finances and Credit. 2010. № 46.
5. Theory of Life Cycles of I. Adizes and Russian Realia // URL: http://ecsocman.edu.ru/db/msg/11728.html.
6. Philonovich S.R. Theory of Life Cycles of an Organization in the Process of Organization Diagnostics // Social Studies. 2005. № 4. PI 53 - 64.
удк 336.225 M.A. Fedorovskaya
EFFICIENCY OF TAX BODIES' PERFORMANCE
The problems of assessment of tax bodies' activities efficiency which tax administration faces are touched upon. Suggestions made provide an opportunity for bodies of legislative and executive power to take specific measures aimed at enhancing the system of tax administration in the country. Suggested criteria for assessing tax bodies’ performance can be put into practice by tax authorities. A new approach to aspects of solving tasks of control over tax compliance, preventing and excluding tax offence rather than solving tasks of tax collection can be also used in practical work of tax bodies.
Key words: tax administration, tax control, tax audit
M.A. Федоровская
РЕЗУЛЬТАТИВНОСТЬ И ЭФФЕКТИВНОСТЬ ДЕЯТЕЛЬНОСТИ НАЛОГОВЫХ ОРГАНОВ
В статье отражены проблемы оценки результативности и эффективности налоговых проверок, которые стоят перед налоговым администрированием. Предложенные автором разработки предоставляют реальную возможность со стороны законодательных и исполнительных органов власти предпринять конкретные меры, направленные на повышение эффективности системы налогового администрирования в стране. Предложенные критерии оценки результативности контрольной деятельности, а также новый подход к вопросам перехода от решения
