A Study On Financial Risk Of Transnational M&A

Recently, with the development of globalization of China, more and more Chinese companies merger and acquisition in foreign countries. Transnational M&A are always facing a lot of risks, the most influential are financial risks. There are a lot of transnational M&A fail resulting from the inaccurate valuation, the not appropriate financing method, or paying mismanagement of the insolvency. So the prevention of transnational M&A financial risk are very important.This thesis take the M&A between Shuanghui International and Smithfield Foods as an example, researches and analyzes the transnational M&A financial risk(including valuation risk, financing risk and payment risk) combining with the Shuanghui International IPO.For the prevention of transnational M&A financial risk, about the valuation risk, we should pay attention to the acquired company information asymmetry risk prevention, the selection of valuation advisory intermediaries and the selection of valuation methods. Considering the possibility of growth, goodwill value, synergistic effects and price bidding ability, the acquired company can be overvalued appropriately. About the financing risk, we should pay attention to the capital structure and maintain the long-term cooperation relationship of loans provider and financial institutions. About the payment risks, at the beginning of the M&A a company should choose a suitable payment method, and after the M&A a company can choose IPO or strategic cooperate with financial institutions to repay the debt in future. For the prevention of payment risks, reassuring creditors’ confidence is the key. Shuanghui international IPO is mainly aiming pay his debts. If a company wants to be IPO in a short period of time after finishing a M&A, they should maintain the image of the company and establish the confidence of their investors.