A Case Study On Financial Risk Of Wangfujing Department Store M&A Of PCD Stores

With the advent of the transformation period of retail industry,a growing number of retail enterprises upgrade their competitiveness by dint of merger and acquisition(M & A)that can contribute to remarkable growth and advantages,as compared to traditional expansion.Nevertheless,M & A will not absolutely score a success due to the enormous risks,especially the financial risks which may lead to M & A failure and even enterprise's financial plight as a consequence of improper management.Thus,the effective study on M & A financial risks as well as the establishment of a financial management system for enterprise's M & A is of non-negligible significance to heightening the safety and efficiency of M & A.Based on previous theoretical studies,this paper studies the case about the acquisition of PCD Stores by Wangfujing Department Store.According to the characteristics of retail enterprises and the schedule of M & A activity,the financial risks of M & A activity are categorized into four types: due diligence risk,valuation risk,financing and payment risk,and subsequent integration risk.Then,according to this categorization mode,a detailed analysis is conducted on the manifestations and causes of the financial risks in different stages of the case about the acquisition of PCD Stores by Wangfujing Department Store through index,quantitative and qualitative analysis methods,and besides,management strategies are proposed for these risks.The successful acquisition of PCD Stores by Wangfujing Department Store is of referential significance to retail industry in urgent need of transformation.In this paper,the study is decomposed into four parts.The first part is "Introduction",which elaborates on current situation of researches at home and abroad as well as research background,significance,thoughts,methods and contents.The second part is "Case Introduction",which not only gives a brief introduction to the industry of the cases selected herein as well as the parties involved in these cases,but also describes the cases based on their M & A process and subsequent development in order to lay a foundation for the third part.The third part is "Case Analysis",which analyzes the financial risks discovered in the cases introduced in the second part as well as their causes.The fourth part is "Suggestions and Inspirations",which brings forth suggestions for the control over financial risks in M & A cases based on several parts above to provide not only references for relevant M & A activities in the future but also the inspirations for enterprise's prevention of M & A financial risks.