Research On Financial Risk Evaluation And Control In The Process Of M&A In Steel Industry

The acceleration of the globalization process and the rapid economic development have resulted in increasing competition among enterprises.M&A as a form of capital operation,can make the company's economic scale quickly become bigger and stronger.After mergers and acquisitions by enterprises,they can optimize the allocation of enterprise resources and facilitate the development of economies of scale,so that the overall strength and overall competitiveness of enterprises can be quickly improved.However,corporate mergers and acquisitions also bring higher risks while bringing in revenues.At present,domestic scholars have conducted more research on merger and acquisition risks,but most of them are based on company perspectives or qualitative analysis of merger and acquisition risks.However,different industries have different M&A risk factors and different preventive measures.The iron and steel industry,as an important part of China's supply-side reform,recognizes,evaluates,and controls this risk both with certain urgency and with relative necessity.This paper mainly focuses on the identification,evaluation and control of financial risks in iron and steel enterprise mergers and acquisitions.First of all,the present status quo of the iron and steel enterprises,the background of the merger,the significance of the research,and the current research status of domestic and foreign scholars on the financial risks of mergers and acquisitions are described.Furthermore,it introduces the types of mergers and acquisitions,the meaning of the financial risks of mergers and acquisitions,and the evaluation methods of risks,in order to provide solid theoretical support for the case analysis of the later articles.It then introduced the general situation and merger background and process of Baosteel Co.,Ltd.and WISCO Corporation.Focuses on the analysis of the financial risks of Baosteel's acquisition of WISCO.Finally,the M&A financial risk index system was constructed on the basis of this,and combined with the fuzzy comprehensive evaluation method to quantify the risk.The main research contents of this article are as follows: Firstly,it analyzes in depth the financial risk factors of the acquisition of WISCO by Baosteel Co.,Ltd.,taking risks as pricing,financing,payment,and financial integration risks in the chronological order of mergers and acquisitions;secondly,it focuses on each specific risk category.Once again subdivided into corresponding risk factors,their risk factors are analyzed in depth based on the actual situation of the company.Third,a risk assessment index system is established to quantitatively analyze the intricate and difficult to quantify risk factors.Through the above analysis and research,the main conclusions of this paper are drawn.First,iron and steel enterprises should focus on financial integration risks.Since most large-scale steel companies are currently state-owned,the government's protection of local fiscal revenue is not conducive to the integration of funds and finances.The second is to pay attention to the pre-merger pricing risk.This is mainly due to the fact that steel companies are heavy asset industries and are subject to macro market influence.Third,through the construction of evaluation index system,the use of fuzzy comprehensive evaluation method can intuitively see the size of the case enterprise risk,so as to help companies focus on forecasting and prevention.Based on the above analysis,the steel companies will be given specific inspirations in controlling pricing,financing,payment,and financial integration risks.In order to provide a realistic and operational preventive and control measure for the financial risk of M&A for the complex M&A financial risk factors,it provides a certain reference value for the evaluation and control of the financial risk of China's iron and steel enterprise M&A.