M & A Risk Factor Identification, Measurement And Disposal Of Research

The growths of enterprises are divided into two ways: the inside growth,which is slow;and the outside growth which is fast. M&A is one of the mostpopular ways of outside growth for enterprises to expand greatly. Although theM&A can bring the enterprise to a high-speed growth road, it is said that only30% of the M&A transactions is successful. The purpose of this paper is tobring forth the way to resolve such risk problems according to the detailedanalysis of M&A experience of Chinese enterprises. With the intend to assist themanagement controlling risks, in this essay a model to measure the risk factorsis also established , which is from the theory of Grey Analysis.With the development of economy and capital market in china, especiallyafter the new issued corporate law and security law, there will be a great amountof M&A transactions in china after the recent capital market reform. As a resultM&A will certainly become a very important approach for enterprises to expand.While we are talking about the good side of M&A, we must pay attention to thebad influence caused by failed M&A transactions, such as the event of DelongComplex and Kelincer Complex. So, in M&A it is necessary to turn our veryeyes on the transaction risks.Due to the game between different agents such as share holders, employeesand local governments, etc. and due to serious asymmetric information, thereare full of risk factors in M&A. These factors are long, potential, complex.With the hope to control M&A risk, it is necessary to establish a system for risksearching, risk testing and risk controlling. This paper tells how to do M&A riskmanagement in three parts.Firstly, starting from factors analysis on the basis of stages-analysis, thispaper brings forth the ways to find out risk factors in different stages. The M&Astages are mainly divided to four as strategy, due diligence, M&A trade, andIntegration. Because the stages work wholly, the success of M&A depends onthe success of every stage, which has its own properties. So, in this part thispaper tries to find out the risk factors through full analysis on every stage.Secondly, this paper tries to establish the mathematic model throughgray analysis theory, which is established by Deng Julong. There aremany risk factors that acts in a chaos way and grey theory are suitably toresolve such asymmetric information problems. So, this paper tries totest the scale of risk by mathematic analysis through establishingAHP-GRAP model and gives the best plan according to the tested scaleto help management do decisions.Finally, through the analysis of risk factors and risk testing, thispaper brings forth several ways to dispose of risks, which are riskevading, risk transferring and risk control in order to bring these factorsunder control.It is a systematic work for M&A risk management. Added to theanalysis in theory, an effective enterprise system must be established forM&A risk control...