Study On Financial Risk Control In Enterprise Mergers And Acquisitions

Due to fierce competition,requirements for strategic planning adjustments and so on,enterprises have to take the form of merger and acquisition to expend their scale,reduce production cost,enhance market share,and achieve the development strategy.While carrying out merger and acquisition activities,enterprises not only obtain profits,but also face risks.Among those risks,financial risk is the most prominent.Through analyzing merger and acquisition failure cases,it can be known that the primary cause for merger and acquisition failures is that relevant enterprises neither attached importance to merger and acquisition financial risks nor fully understood that.As a result,those enterprises' insufficient financial risk controlling abilities finally led to their failures in merger and acquisition.Therefore,the author of this paper will attempt to draw a conclusion for and present the enlightenment from the case analysis on the merger and acquisition of Yunnan Walvax Biotechnology Co.,Ltd.(hereinafter referred to as “WS”)through analyzing and discussing merger and acquisition risk control.The paper consists of five parts.The first part mainly include introductions of the research background,research significance,relevant aspects of merger and acquisition risk control and the literature review.The second part summarizes merger and acquisition risk control theories and introduces the basic concepts,characteristics,methods and theoretical basis of merger and acquisition risk control.The third part introduces the basic information about the acquisition of Hebei Da'an Pharmaceuticals Company(hereinafter referred to as “HD” by WS and the basic information of both parties.In this part,financial risks formed during the acquisition and the financial risk control of WS is summarized.The fourth part mainly discusses problems existed in the risk control of WS during the acquisition.In this part the causes of the problems are analyzed.Moreover,the risk control of WS in its value assessment of HD,financing method,payment method and post-acquisition financial integration are expounded.The last part is about conclusion for and enlightenment from the case analysis on the merger and acquisition.The discussion of this paper is made through combining the standard researching method and case analysis method.Under the background of rapid global economic growth,the mergers and acquisitions waves among Chinese enterprises roll up.This paper focuses on expounding basic theories about merger and acquisition financial risk control,including the theory of internal control,the risk management theory and the merger synergy theory.On the basis of basic theories about enterprises' merger and acquisition financial risk control,this paper analyzes risk control in the value assessment of HD,financing structure,payment method and financial integration in detail.Through observing many merger and acquisition cases,it can be known that financial risks brought about by inaccurate assessment of values of targeted enterprises,inappropriate financing method,unreasonable payment method are the main reason behind merger and acquisition activities.Therefore,the author of this paper feels it necessary to analyze financial risks occurred in Chinese enterprises' merger and acquisition cases.That will be significant for promoting the development of Chinese enterprises' merger and acquisition strategies and improving their strengths through helping them control financial risks during merger and acquisition activities.This is a pioneering paper since there are few existed research works on the horizontal M&A way adopted by those domestic biological pharmacy enterprises.At the same time,this paper obtain enlightenment from the failure of the acquisition of WS through discussing merger and acquisition cases of nonlisted domestic companies in the same industry,providing a reference for similar industries and enterprises.As the author's level of knowledge is limited,this paper only conduct theoretical discussion on merger and acquisition financial risk in general significance and the case analysis can't be made expelling other external factors.These are the limitations of the paper.