Study On The Risks Of Chinese Family Business's M&A And Its Prevention

Nowadays, Chinese family business with their powerful ability,has played an important role in Chinese merger and acquisition boom. M&A of Chinese family business strengthens and expands their development, and it has become an effective method of most Chinese family business to achieve their objectives, such as economies of scale and diversified development. Otherwise, according to the domestic and international studies, as an important capital operation, mergers and acquisitions (M&A) has a high failure rate. the high risk of family business's M&A has become an important factor, which makes Chinese family business move towards failure.So this paper targets the risks of Chinese family business's M&A, analysis the motivations and its risk, and then suggests some countermeasures. It aims to increase the prevention capabilities of M&A risks of Chinese family business, and enhance the success rate of M&A.Based on overview of the study of the family business's M&A risks, this paper firstly analyses the motivations of its M&A, and points out that primary business expansion, diversification of operation and capital operation are the main reasons toward it. Then, it analyses strategic decision risks, financial risks and integration risks in the procession of M&A. Secondly, based on the statistic data and cases, from the aspects of structure of property rights, decision-making methods, internal controls, enterprise culture, this study analyses the institutional reasons of the M&A risks of Chinese family business, and find out the results, such as centralization and fuzzy definition of property right, authoritarian style of decision-making, weak interior control, restriction of enterprise culture, and so on. Thirdly, at the base of above analyses, this paper suggests some M&A risks countermeasures for Chinese family business, such as establishing reasonable structures of property rights and corporate governance, building enterprise development and M&A strategy, creating a scientific internal control system, perfecting scientific decision, establishing advanced...