Discussion Of Internal Control Process Design Of China’s Enterprises Overseas M&A Transactions

Overseas M&A transactions is a special transaction. With the deepening of China’s reform and opening up, the continued development of the national economy and the driving of economic globalization, the willingness of China’s Enterprises to go out more and more intense. The number and scale of the overseas mergers and acquisitions are increasing year by year. However, this particular trade practices of overseas mergers and acquisitions along with the great risk. With Chalco acquisition of Rio Tinto,SAIC overseas acquisition of Ssangyong, CNPC acquisition of Unocal and other domestic enterprises overseas M&A failures, Theorists and practitioners aware of the importance and urgency of strengthening the internal control of overseas M&A transactions.Over the years, the internal control issue has been a hot topic of research at home and abroad. Since internal control was formally proposed in the early20th century, nearly a hundred years of the development process. The internal control research began in the mid-1980s in the domestic, So far there are more than20years of history. At present, the internal control have been gave a great deal of attention by both of the theorists and practitioners. In today’s global economic integration environment, competition between enterprises became more and more intense. With the business environment changing, the risk which enterprises are facing is dramatic increasing. This lead to the objectives of internal controls has been not the anti-error or anti-fraud, but the effective control of the business risk. In2004,the U.S.COSO Committee released the《Enterprise Risk Management Framework》based on the internal control framework. This marks the foreign internal control research have been developed to a new stage. That is the integration stage of internal control and risk management. In China, the trend of internal control in academic research and practical operation has became to risk management-oriented. Learn from the guidance of the COSO Enterprise Risk Management Framework corporate internal control practices has been issued in June2008.This specification reflects the guiding ideology of the international internal control theory, requires companies to develop and implement internal control systems, make risk management as an important element.However, in actual business, many companies said that the company’s internal control system which is overly prescriptive and not feasible has been difficult to integrate into business.Specific to the internal control of China’s Overseas M&A transaction,as well.How to design an internal control can best leave the internal controls applied to enterprises in overseas mergers and acquisitions practice? This paper argues that the idea of the process design is an effective way to solve such problems. Therefore, this article from the perspective of risk management oriented to explore the processes design of internal control of China’s Overseas M&A transactions.Specifically, the main content of this paper is as follows:The introduction describes the research background of this article, the significance of the topic, literature review, writing methods and ideas, which focus on the content of the literature review section that gave a comprehensive introduction on domestic and international research on the internal control and M&A risk management. The first chapter introduces the theory of China’s Overseas M&A transactions internal control process design, including the concept and theoretical basis of China’s Overseas M&A transactions, the concept of internal control,internal control and risk management integration, the theoretical basis of the internal control, the concept of internal control process design and the goals and ideas of internal control process design of China’s overseas M&A transactions.The second chapter focuses on sorting out and defining the China’s Overseas M&A transaction process. China’s Overseas M&A transaction process is divided into preparation, implementation, integration of three major stages.Preparation phase is divided into M&A strategy formulation, select acquisition targets and due diligence.Implementation phase will be divided into valuation of the target company, transactions negotiation, select the financing method, and select the payment method and the defining and delivery of property rights.Integration phase is divided into the development of the plan of merger integration and the full implementation of the integration.In the three chapter, the various sub-processes of the three stages of risk have been analyzed. According to the various risks faced by the various sub sectors the critical control points and control measures to control risks have been determined. In the chapter four, according to the previous analysis and the idea of the process design, the internal control flowchart of the various stages of China’s Overseas M&A transactions have been designed.In conclusion section, the deficiencies and Prospects of this article have been pointed out.