Research On The Financial Risk Control In The Cross-border M&A Of Internet Companies

The development of Internet enterprises in China started relatively late.It is urgent to obtain foreign technology,talent and experience through cross-border mergers and acquisitions(M&A).According to statistics,the number of cross-border M&A transactions in the Internet industry in China has been ranked in the top three for three years.However,less than 20%of cross-border M&A can be truly successful.Their failure is closely related to the financial risks in cross-border M&A.This shows that it is necessary to strengthen the control of financial risk.Therefore,this paper selects typical cases to study the financial risk control in the cross-border M&A of Internet companies in China.Firstly,this article adopts the method of literature analysis to review and summarize the research results of domestic and foreign scholars on the causes of failure in cross-border M&A,the causes and controls of cross-border M&A financial risks,and the financial risk of cross-border M&A of Internet companies.These reviews lay the theoretical foundation for the study of this paper,and at the same time show that there is a lack of research on financial risk control in the cross-border M&A of Internet companies.This reflects the value of the study in this paper.Secondly,this paper adopts the method of normative analysis to analyze and summarize the theory of marginal industry expansion,efficiency theory,manager's arrogance hypothesis and information asymmetry theory.At the same time,this paper draws on the five-element framework of internal control which is established in the"Basic Standards for Corporate Internal Control" and its supporting guidelines to construct a financial risk control framework of "risk assessment-control measures-effectiveness evaluation".This forms the theoretical support for the study of this paper.Thirdly,based on the present situation of cross-border M&A and the causes of financial risks in China's Internet enterprises,this paper uses the method of case study to research and analyze the case of Tencent M&A of Supercell in accordance with the financial risk control framework of "risk assessment-control measures-effectiveness evaluation".The first is to use the method of list identification,financial statement analysis and Z-value model comprehensive analysis to evaluate the financial risk of Tencent in the process of cross-border M&A of Supercell,and the conclusion is that cross-border M&A increases financial risks.The second is to analyze the risk reduction and risk sharing strategies adopted by Tencent.The third is to analyze the financial situation and operation results of Tencent through longitudinal and horizontal comparison.It is concluded that the control measures based on the control framework have better control over financial risks and increase the company's profits.Finally,based on the study on the financial risk control of Tencent's cross-border M&A of Supercell,this paper draws the inspiration of the effective control of the financial risk of cross-border M&A in China,hoping to provide reference for Chinese Internet companies.The study of the financial risk control of cross-border M&A will help China's Internet companies improve the effective control of financial risks,increase the effectiveness of cross-border M&A,and promote them to "go global" better and faster.