The Financial Risk Analyst For Cross-border Mergers And Acquisitions

Recently,with the prosperity of China economy and the increasing degree of economy globalization,more and more Chinese companies participate in Cross-border M&A.Because of the Cross-border M&A usually happen in two or more different countries,The differences of the political,cultural,legislation,supervision,market environment sometimes make the situation of asymmetric information.Compared with domestic M&A.,there are more types of risks.Meanwhile,Cross-border M&A activities usually are carried out in a larger scale,therefore the risks of Cross-border M&A are more in quantity.Among ail kinds of risks,financial risks have remarkable impact on overall process of M&A.There are a lot of Cross-border M&A fail resulting from the inaccurate valuation,not appropriate financing method,etc.So the prevention of financial risks is vital to Cross-border M&A.This paper select the M&A between MIDEA and KUKA as case study object.Firstly,this paper sorts out the current research,related theory and defines related concepts of M&A and its financial risk;then analyze systematically KUKA finance condition;then classify finance risk into valuation risk,financing risk,payment risk,exchange rate and interest rate risk,Integration risk,analyze and evaluate risk by module;then analyze risk control measure and put forward suggestions;finally,based on analysis above,make some suggestions for Cross-border M&A of Chinese enterprise in the future.The results of this paper shows financial risk of M&A between MIDEA and KUK.A mainly lies in valuation risk and payment risk.Besides,because of the fluctuation of international economy situation,there are exchange rate and interest rate risk in this transaction.In the case of risk control measure,MIDEA take much effort to deal with vaiuation risk and payment risk but pay less attention to exchange rate and interest rate risk.Study on this case risk and risk control measure can provide reference for other enterprises to better control financial risk and increase probability of successful M&A.