Scaling up capital in the small business and medium-sized businesses through transactions mergers and acquisitions

Abstract

The Russian capital market is a system that has considerable flexibility in the conditions of favorable circumstances of capital mobilization through the issuance of shares and the use of equity capital as a means of activating the attraction of credit working capital in the development of the domestic debt capital market. This together determines the need to increase the requirements for financial management, including at the level of small and medium-sized businesses. Among the circumstances contributing to this trend, it is worth highlighting, first of all, the increase in the cost of attracting credit capital through the monetary mechanism regulated by the Bank of Russia by targeting inflation to stabilize the ruble, unemployment, social differentiation and other socio-economic factors that determine the unstable state of the Russian economy. The system-forming problems of the development of financial instruments for domestic small and medium-sized enterprises (SMEs) complicate the possibilities of developing and using compensatory mechanisms for hedging risks, and therefore ensuring the sustainable development of corporate governance as a closed system. The success of corporate governance and the functioning of SMEs reflects the effectiveness of the Russian economy as a whole. The volatility of the capital market has a significant impact on SMEs. One of the most effective elements of stabilizing the state of economic entities is scaling through mergers and acquisitions. The transformation of monetary capital into equity capital, and then into industrial capital of SMEs is a financial component of scaling up in the field of small and medium-sized businesses by reducing the cost of goods and services produced, as well as expanding sales markets.