Research On Risk Control Of Enterprises’ Overseas Mergers And Acquisitions

Along with the development of Globalization and "the Silk Road Economic Belt and the 21st-Century Maritime Silk Road",China has seen unprecedented growth in overseas mergers and acquisitions investment,the amount of Chinese enterprises’ overseas M&As peaked in 2016.However,since the economic and policy uncertainties have not been eliminated,the total number and amount of transactions in 2017 and 2018 have declined continuously.Although the number of transactions has increased slightly in the first half of 2019,the deal amount is still declining,and the Chinese enterprises’overseas M&As have entered a low period.In 2020,there is little chance for the overseas M&A market to rebound,and it is still possible to continue in a depressed state.Due to the complicated transaction process of overseas M&A,there are many risks in various periods.In recent years,the judicial reviewers are more and more strict in their control over the review of overseas M&A,and the control over financing and foreign exchange is also continuously strengthened.These factors lead to the low success rate of Chinese enterprises’ overseas M&As.In early 2020,the pneumonia epidemic caused by the new coronavirus suddenly spread in various regions of China,which further increased the difficulty of Chinese enterprises’ overseas M&As.In a word,enterprises are faced with a large number of potential risks in each stage of overseas M&A,and whether they can effectively identify and avoid risks is an important factor for the successful completion of overseas M&A,which requires Chinese enterprises to further improve the risk control ability of overseas M&A.CNOOC’s merger and acquisition of Nexen was the largest overseas merger and acquisition of mainland Chinese enterprises at that time,and it was also one of the landmark case for Chinese enterprises to invest overseas.There are many bright spots in its integration process and its risk control methods in various links,but also some deficiencies,which can provide some guidance and warning on the risk control for Chinese enterprises’overseas M&As.This paper analyzes the risk control measures in the classic case of CNOOC’s merger and acquisition of Nexen,in order to play a reference and warning role in the similar overseas M&A risk control of Chinese enterprises.In addition,this paper adds the elaboration and analysis of the current situation,development trends,characteristics and the present challenges faced by the Chinese enterprises’ overseas M&As.Finally,combined with the current policy situation,this paper puts forward reasonable advice on how to deal with the current major risks of Chinese enterprises’overseas M&As.There are two conclusions in this paper:first,fully understand the risk and effectively control the risk;Second,carefully assess the risk and reasonably determine the value.The structure of this paper is as follows:firstly,it introduces the research background,expounds the research topic,and explains the significance of the research;It summarizes the domestic and foreign literatures,and sorts out the literatures related to the risk and the risk control of overseas M&A.Secondly,it expounds the current situation and development trend of overseas M&A in mainland China as well as the characteristics.Then it analyzes the current challenges of Chinese enterprises’ overseas M&As.Thirdly,it introduces the case of CNOOC’s merger and acquisition of Nexen,expounds the basic information of the buyer CNOOC and the target company Nexen respectively,then analyzes the motivation and capability of CNOOC’s acquisition,and briefly combs the whole process of the case in the form of tables.After the case introduction,the next chapter,risk control analysis in CNOOC’s merger and acquisition,is introduced.This chapter is divided into five sections.The first section uses mind map to sort out the risks in the process of CNOOC’s merger and acquisition in a divergent way;The second section uses qualitative analysis to analyze the risks in detail,which paves the way for the following risk control;The third section describes how CNOOC’s management has dealt with the identified risks;The fourth section analyzes the advantages of risk control in CNOOC’s M&A;The fifth section analyzes the shortcomings of risk control in CNOOC’s M&A.Finally,based on the case analysis above,this paper summarizes the whole paper,and puts forward relevant policy suggestions from four aspects in view of the mager challenges faced by overseas M&A:strengthening the review,so as to attach importance to the political review risk,strengthening the financing and foreign exchange control,paying attention to the financial risk,flexible and active response in the face of emergencies,and establishing the protection mechanism for the rights and interests of overseas M&A.