Financial risk identification and control of cross border
merger and acquisition enterprises
Author:
Yuanyuan SUI, Adelina DUMITRESCU-PECULEA
JEL:
M41
DOI:
10.20869/AUDITF/2016/144/1359
Keywords:
Financial risk, cross-border M&A, Dupont method, mechanisms of financial management.
Abstract:
Mergers and acquisitions (M&A) are basic channels for modern companies’ growth. With globalization speeding up, multinational companies increasingly take on M&A activities to strengthen global market positions and raise competitiveness. In recent years, M&A activities have played an important role in Chinese companies. Financial risk is inherent to M&A processes in cross-border companies. Also, more than 50% of Chinese companies did not achieve their M&A goals. Therefore, recognizing and controlling financial risk is essential. This paper analyses the financial risk from different perspectives and then provides suggestions by analysing a typical M&A case: Bohai Leasing merger with Seaco Company. Complete due diligence and clear M&A strategies, combination of various financing instrument, strategic paying methods and finance integration are some ways for controlling and decreasing finance risk.
Abstract(231KB)
Article(730KB)