Abstract:

With the prevalent trend of technological innovation in China,it is no surprise to see the technology industry becoming the fastest growing sector in China's M&A market. The market characteristics and development quality will vitally influence its long-term prospects. The evidence has shown that:(1)VC/PE are becoming major players in this invigorated market,not only as the main seller but also as the main buyer. VC/PE have contributed vastly to the technological development in China;(2)due to the fact that strategic investors are more prone to foreign technology projects or even non-technology projects,most domestic cases of M&A were conducted between domestic financial investors,which means that the shareholding structure of the target companies have not shifted from short-term investors to long-term ones,therefore the financial investors have not finally exited their invested projects successfully by means of the M&A transactions;(3)the major difference between the investment strategies of the above two types of investors indicates two warning signs, the first being the possibility of opportunism and thus bubbles in technology investments in China,and the second being the difficulty in final exiting the domestic technology projects owned by VC/PE. These potential problems will have an impact on whether technological investments in China continues to develop strongly and consistently and therefore should draw attention from investors and policy makers.

Key words: technology M&A, financial investors, strategic investors, market share, industrial distribution