Mergers And Akquisitions Financing Risk Management

A new tide of mergers and acquisitions(M&A)has started around the world along with the promotion of national policies,the development of technology and the mature market.Many Chinese enterprises have chosen to optimize asset allocation,expand the scale of the enterprise,and realize the strategic transformation by means of mergers and reorganization.M&A has also become a hot topic in academic research,and rich research achievements have been made.Scholars generally think that M&A is a kind of complex and risky investment activity,with high hidden failure rate.Based on such a background,this paper selects the case of Pang Da Automobile Trade mergering SAAB to study the investment behavior of M&A.First of all,on the basis of literature review,this paper introduces the process of M&A,the definition and classification of financing risks in M&A.Then,using Pang Da case as an example,this paper gives a general introduction to the process of M&A.Specifically,this paper puts an emphasis on the analysis of Pang Da's financial data before and after the M&A,identifying potential risks of this M&A and making an assessment of the ultimate results of this M&A.It turns out that there is a big risk in Pang Da's mergering case,and this M&A is a flop.For Pang Da,its revenues and profits fell sharply after the M&A,with multiplied debt,potential loss of billions of dollars.Worse still,Pang Da ran out of its cash flow.In the case of Pang Da mergering SAAB,the financing risks are diverse.But if Pang Da could raise enough money in time,the efficiency of M&A would be greatly improved,and correspondingly,the possibility of the M&A's success would also be improved.However,Pang Da's M&A has been influenced by many factors,like the foreign exchange control exercised by the Chinese government,the systems for examining and approving overseas investment projects,complex examination and approval procedures,which all lead to the delay and inefficiency of overseas investment and financing.But if the company sets up overseas financing framework and raises funds from overseas companies in advance of the process of cross-border investment,the company can participate in the M&A as a foreign company,in which way the efficiency of M&A will be greatly improved.In addition,concerning the international trade,the offshore bank financing is commonly used in our country,which can indeed help enterprises solve their financing difficulties,lower the financing cost and reduce the exchange rate risks.