Financial Risk Analysis And Prevention In The Transnational M&A Of Chinese Enterprises

Since the ninth decade in the twentieth century, under the influence of the fifth wave of the Transnational M&A (Merger and Acquisition) and the "going out" strategy, Chinese enterprises have grasped the chance of entering WTO and become powerful forces in the stage of transnational M&A. A large number of outstanding Chinese enterprises cut brilliant figures in this field. The Transnational M&A is an effective way to accelerate the capital accumulation and development of an enterprise. It will no doubt become an ideal choice for Chinese enterprises to develop international business, helping them expand their percentage on the international market and obtain more advanced technologies and resources. However, there is also high risk in Transnational M&A, especially financial risks. Research indicates that 50%-70% attempts of transnational M&A are unsuccessful. Financial risk exists in the whole process of the M&A and is one of the determinate factors of the success of the M&A. Therefore, how to lower down the risk, especially the financial risk, becomes quite important and urgent. At present many Chinese enterprises lack explicit planning and enough experience in international investment when they start to "going out", so things do not turn out as they wish in many circumstances.This thesis is composed of seven parts. Chapter one is a brief introduction of the background information, the rationale and the significance of the present study. Chapter two reviews the relevant concepts of transnational M&A, explains the theoretical foundation, the present situation and the achievement of transnational M&A. Chapter three provides detailed description and analysis of the transnational M&A of Chinese enterprises, including its history, motivation, property and tendency. Chapter four is the center of the thesis in which we analyze the risks that Chinese enterprises face in transnational M&A and their origins, including the strategic decision risk, pricing risk, interest and exchange rates risk, financing risk, payment risk, etc. Chapter five mainly discusses how the strategies and system of financial risk prevention of the transnational M&A of Chinese enterprises. Based on the current situation of the transnational M&A of Chinese enterprise, Chapter six provides suggestions for the government on how to prevent risks. The suggestions mainly include: 1.Enforce the macro-control and improve the system of laws for international investment; 2. Widen the channels of financing; 3. Make full use of intermediaries and train a group of professional staff. 4. Strengthen personal training. Chapter seven is a case analysis of china Mobil's first foreign acquisition of the Pakistan carrier Paktel. Based on the risk prevention strategy mentioned above, the analysis focuses on how to prevent the financial risk of M&A.In a word, the main objective of this thesis is to remind those enterprises which actively participate in the transnational M&A of that the transnational M&A is a double-edged sword. When we see the benefit it could bring us, we should also consider the potential risk and take preventive measures.