Cross-border M&A Risk Analysis Of Chinese Private Enterprises

After the financial crisis, Chinese enterprises face the transformation of economic development mode. The macro background provides an opportunity for Chinese enterprises to invest actively in foreign country. The enterprises can upgrade their technology, rationally allocate of resources, and input of management experience, expand financing channels, avoid anti-dumping barriers by cross-border mergers and acquisitions. At the same time, there are a growing number of private enterprises in China becomimg the sensitivity groups to the market. They can control cost effectively and have the ability of overseas mergers and acquisitions. After the2008financial crisis, the cross-border mergers and acquisitions of private enterprises in China grows rapidly in terms of the number or the size, and so far the number of cross-border mergers and acquisitions of Chinese enterprises have occupied nearly half of all. From2008to the first half of2012, there were118cases of cross-border mergers and acquisitions of private enterprises. It is nearly65%of all cases in2011and2012. The status of private enterprises becomes more and more important in the "going out" strategy. Private enterprises are going to be a new bright spot in China’s cross-border mergers and acquisitions. They benefit to improve the core competitiveness of enterprises, and promote economic growth. However, the success rate of cross-border mergers and acquisitions of Chinese enterprises is only30%.The risk hides in all aspects of the M&A process. Especially for private enterprises, there are a lot of external factors, such as industrial policy constraints, laws and regulations insufficiency, the lack of intermediaries and immaturity capital market. The internal factors include the level of multinational management, financing capacity and so on. These factors affect together the extent of the risk of cross-border mergers and acquisitions of private enterprises. Through theoretical analysis of the risk of cross-border mergers and acquisitions of private enterprises, I hope to improve the quality of acquisition. This has practical significance. After summarising the literatures of the domestic and foreign experts about the risk types of cross-border mergers and acquisitions, the risk types of M&A, the assessment and control methods of the cross-border M&A risk, I summed up the hierarchy of the risk of cross-border mergers and acquisitions of Chinese enterprises.By improved analytic hierarchy process,it makes the case for quantitative analysis more accurate. Then through analysing the case of Sany mergers the Putzmeister, I come to the conclusion that the Sany needs to focus on strategic risk, political risk, management integration risk and financial risk. Finally according to the conclusions of case analysis, combining with the main obstacle of private enterprises, the enterprise and government should propose appropriate risk prevention recommendations.The main contribution of this paper:According to the specific processes of cross-border mergers and acquisitions of Chinese enterprises, I build hierarchical, detailed cross-border M&A risk hierarchy. Due to subjective disadvantages in the analytic hierarchy process, I use fuzzy comprehensive evaluation to improve the AHP. In addition, using the method of quantitative analysis to analyse the risk of cross-border mergers and acquisitions of private enterprises in China,I think that should be focus on strategic risk, political risk, management integration risk and financial risk. The deficiency of this article:Because of the limitations of the case data and my research level, the conclusion inevitably is biased.