Research On M&A Financial Risks Of Companies Listed On Growth Enterprise Market

After more than ten years of rapid development, China’s economy has made great achievements that amazed the world. In recent years, China is carrying out the transformation of the economic developing mode and structural transformation of the economy. Also, industrial upgrading is another important target. Therefore, pillar industry in national economy is becoming high and new technology instead of traditional manufacturing. The companies listed on GEM(Growth Enterprise Market) are significant force of China’s economic restructure.As GEM becomes a flourishing market, the companies listed on GEM are pursuing denotative growth and pay more attention on M&A. The companies listed on GEM achieve the goal of M&A by means of integration of industry chain, horizontal absorption development and interdisciplinary collaboration. The M&A of the companies listed on GEM are always active, but recently, the goodwill impairment risk of the companies listed on GEM is prominent. The incidents of goodwill impairment are breaking out, which invite the investors to reexamine the M&A financial risks of the companies listed on GEM.This paper uses literature research method, qualitative research method and case study method. Firstly, based on the theoretical research on M&A financial risks, the paper divides the financial risks into four parts, including pricing risks, financing risks, payment risks and financial integration risks. Secondly, this paper puts the qualitative research method into use and states the general situation and characteristics of the companies listed on GEM. The companies listed on GEM mostly consist of pioneering enterprises which are in the growth stage, including high-tech enterprises and small and medium-sized emerging enterprises. Besides, the proportion of private enterprises is high and market value is relative low. Therefore, M&A of companies listed on GEM has distinctive features and deals are main industrial consolidations. What’s more, the deals occur mostly in asset-light and high-growth industry and are marketable. Finally, combined with above characteristics, this paper applies the case study method into the M&A case of the companies listed on GEM. Concerning several cases, the paper analyzes the pricing risks, financing risks, payment risks and financial integration risks thoroughly and provides suggestions on strengthening the management.