The Steel Industry Mergers And Acquisitions Of Financial Risk Assessment And Prevention Research

The steel industry is an important part of our national economy. The developmentstatus of the steel industry influence the overall development of our national economy. Atpresent, our country’s steel production has ranked first in the world for sixteen consecutiveyears. But, compared with the developed countries of the world, there are lots of problemsin the iron and steel industry in our country. Such as overall low level of Technology,products with low added value, small scale enterprise, dispersed industrial distribution andlow degree of concentration."Chinese national economic and social development five-yearplan" released in2011stressed that it is time to focused on iron and steel industry topromote the implementation of powerful alliances enterprises and cross-regional merger andreorganization in order to raise the level of industry concentration. M&A is an effectiveway of our country to develop from the big country of iron and steel to power one now. Butiron and steel enterprises in M&A activities inevitably encounter risks in mergers andacquisitions, especially the financial risk. It is very important to measure and prevent andcontrol the financial risk of M&A. It has a positive theoretical and practical significance tostudy in-depth of merger and acquisition activity in the domestic iron and steel enterprisesfinancial risk combined with the characteristics of our country’s iron and steel industry.This analysis method combined qualitative analysis and quantitative analysis. Firstly,the connotation of enterprise merger and acquisition of the financial risk is defined. And theauthor apply qualitative analysis discuss the types and causes of the financial risk of M&Aand divide the acquisition of the financial risk into four categories: the risk of evaluatingenterprise’s value, the risk of financing, the risk of payment and the risk of financeintegration. Secondly, the author introduced the development situation and the merger andacquisition of our country’s steel industry and analysis of the M&A and M&Acharacteristics of our country’s iron and steel industry. Thirdly, the author established indexevaluation system on the financial risk of M&A based on characteristics of our country’siron and steel industry. Fourth, the author use the analytic hierarchy process and fuzzymatrix model to build mathematical modeling based on the financial risk of M&Aevaluation index system. Fifth, the author run quantitative analysis of the financial risk of M&A combined with domestic Baosteel Group M&A Bayi steel case. At last the author putforward some feasible suggestions to prevent and control the financial risk of M&A of ourcountry’s iron and steel industry to improve ability to prevent and control the financial risk of the steel industry M&A of our country.