Research Of Motivation, Performance And Risk Control Of Geely’s Acquisition Of Volvo

In recent years, the overseas acquisitions of domestic enterprises have been popular. According to relevant data show that the trading volumes of China in 2011 have rose as high as 86% and the amount of mergers and acquisitions increased 92.3%, nearly doubled. According to the report, Chinese enterprises overseas mergers and acquisitions contributed to a boom in the past five years, increased five times in five years. There are 30 private listed companies have make out their overseas acquisition plan since 2012 which are mainly from the United States, Germany, Australia, and some companies in Canada. The kind of overseas acquisition is given priority to with state and private enterprises follow up have been increasing.China’s current overseas acquisitions are similar to the 1980 s of Japan’s overseas acquisition. It is difficult to comment whether China can achieve the expected economy effect with the strategy of go out our country and further reform.There is no doubt that this "snake swallow elephant" of Geely’s acquisition of Volvo is the classic of overseas mergers and acquisitions. This article is from three aspects of the motivation, performance and risk control to study the overseas mergers and acquisitions of Geely’s acquisition of Volvo. I hope it can provide some reference basis for China’s thermal overseas mergers and acquisitions through the case study.First of all, I describe the motivation, performance and risk of overseas acquisitions based on the extensive literature, which provides a strong theoretical basis for this article. Then I combine the classic case of Geely acquisition of Volvo analysis the real motivation, performance and risk, and a number of recommendations to prevent the risk. At last I come to the conclusion of this paper and make recommendations for the overseas mergers and acquisitions of automotive industry. In this paper I use the way of case analysis to study mergers and overseas acquisitions. It is mainly the comparative analysis of performance before and after the acquisition of Geely. The method of analysis is mainly through financial and non-financial indicators index. The financial index method is mainly analyzed and studied by profitability, solvency and development capacity. Non-financial indicators method is mainly analyzed by two aspects of market share and technological innovation ability. Then I combined with the industry’s key financial indicators so that we can see how the performance of the M&A in the end. Also I raised the risk encountered in the acquisition process and take some measures based on the risk.In this paper, I can come to the conclusion after a series of analysis and research as following. Firstly,Greely acquisition of Volvo is mainly to get the transition from strategy to expand market share from the market and go to the world. Secondly, before and after the performance of the M&A has been significantly improved but the debt pressures are still strong. Thirdly, from the risk in terms of the acquisition, Geely still faces significant operational and financial risks, especially the risk of culture integration.