Research On Risk Management In M&A Transaction

The main purpose of M&A is to pursue maximization profit in the long-term of the enterprise,and it is a development strategy that the enterprises choose initiatively to deal with the market competition.With the maturity trend of China's M&A market,the strategic M&A transactions have achieved strong growth in China.Although the number of mergers and acquisitions is increasing sharply,but there is a high rate of failure,M&A failure will lead a serious adverse impact on the company.This paper focuses on the risk management during M&A process of enterprises,we start from the perspective of risk management,and analyze the risks and problems in the process of M&A and business operation,conclude risk management plan in mergers and acquisitions and reduce the failure rate.The paper takes the specific case as analysis object,tending to find out the risk management question during M&A of the case.The research adopts the methods of literature research,financial analysis,event study,and we analyze from theory to application,from macro level to micro level,and focus on the risk taken by the case companies in the process of M&A,discussing and conclude suggestions and solutions to the problems.In the paper we take the listed company Y acquire X as case study,based on previous theory,we want to see big from small,and try to enrich the M&A risk management system both in theory and practice.The first part of the paper is introduction,which introduces the writing background,writing significance and writing framework.The second part is literature review,which reviews previous research in China and aboard.We here analyze the possible risk taking in the M&A process of the case,which lays the foundation for the following parts.The third part is talking about the specific background of Y and X.The fourth part is the vital section of this paper,which analyzes the case from the perspective of M&A risk management in three stages:pre-M&A,ing-M&A,post-M&A.Here we firstly carry out the theoretical analysis,according to the theory we know the correct operation method and action oriented in the three stages;secondly,we analyze the specific circumstances of the case,and find the risk and possible failure reason in the three stages respectively faced by the company;finally according to case study,we identify the correct risk measurement and put forward the corresponding strategies to deal with the risks.In this paper,it is considered that the enterprises should make right M&A strategic plan in the stage of pre-M&A,which need to be in accordance with the overall company and market strategy.In the meantime,due diligence should play a key role in the recognition of risk.Secondly,M&A valuation need consider all kinds of risk factors and include them in the valuation system,robust due diligence and success similar valuation case compare are important during the stage of ing-M&A.Thirdly,the company should carry out a nice rhythm and suitable integration after completing the acquisition,in the stage of post-M&A,integration will help to supervise the behavior of the target company.In the perspective of acquire party,a reasonable incentive mechanism must be set to help target company achieve performance target.