The Financial Risks Of The Target Enterprise, Mergers And Acquisitions

M&A is a significant phenomenon in economic life and an important means in company's development. Every economic boom is accompanied by large number of M&A activities, and usually a company's expanding is marked by M&A. To resolve the problem of financial risk of the target company has decisive effect in M&A. Research on financial risk problem will increase a company's decision-making ability and offer multi-approaches to optimize its value.Through digesting theories of the target company's value in M&A, we discriminate the conceptions, types and motivations of M&A. We put emphases on the model of evaluating of the target company, namely Discounted Cash Flow Model (DCF), and expand its principles and fixing of main parameters. Based on them, we introduce the target company financial risk evaluating model, which we call it back-propagation neural network model. Further more, we enunciate its conditions and its application. Then we judge the merits and faults of these two models, and propound the advantage of combination in practice. At last, based on the actual state of the target company's financial risk evaluating in M&A, we analyze the questions in the target company's financial risk evaluating, and propose the combination of Discounted Cash Flow Model and back-propagation neural network model. In the end of this article, we verify the model through cases.