Research On Financial Risk Prevention Of Overseas M&A Of Private Enterprises In China

The change of economic environment has a decisive impact on the business decisions of enterprises.Under the trend of global economic integration,many enterprises have set foot on the road of external expansion.Compared with developed countries overseas,Chinese enterprises started relatively late and did not start to attempt overseas mergers and acquisitions until the end of the 20th century.The outbreak of the financial crisis in 2008 provided an opportunity for private enterprises with strong development to make overseas acquisitions.Encouraged by the "go global" strategy,both the number and scale of foreign investment of private enterprises showed a rapid growth trend.Even in 2016,private enterprises overtook state-owned enterprises and became the main force in overseas mergers and acquisitions of Chinese enterprises.But what cannot be ignored is that the survival rate of overseas m&a by private enterprises is not high.Under the influence of various political and legal risks,private enterprises need to bear more pressure and risk than domestic m&a to carry out overseas m&a.By discussing many overseas m&a cases,it can be seen that the financial risk throughout the whole process of m&a is the key factor of m&a success or failure.Therefore,it is particularly necessary to study and summarize the financial risks in each stage of overseas m&a.This paper takes the "Joyson Electronics m&a KSS and PCC" as an example in 2016.Firstly,starting from the development process of Chinese enterprises' overseas m&a,this paper summarizes relevant literature on financial risks and prevention strategies of m&a,and analyzes relevant theoretical basis.Secondly,it analyzes the financial risks of overseas m&a by private enterprises,explains the current situation,characteristics,main difficulties and corresponding solutions of overseas m&a by private enterprises,and makes a comparative analysis of the differences between overseas m&a by private enterprises and that by state-owned enterprises.Then,based on the specific cases of Joyson Electronics m&a,this paper elaborates the financial risks involved in strategic decision,valuation and pricing,financing and payment,exchange rate and other aspects in the process of merger preparation,implementation and integration,and uses various financial indicators and z-value model to measure the financial risks in the process of m&a.Based on the case analysis,this paper finally puts forward the specific preventive measures for Chinese private enterprises to cope with the financial risks of overseas mergers and acquisitions in view of the various risks existing in the merger of Joyson Electronics.Through research,this paper draws the following conclusions:(1)the characteristics of China's private enterprises in overseas mergers and acquisitions determine their unique financial risks;(2)private enterprises should pay more attention to the control of financial risks in all stages of overseas m&a and take preventive measures in advance.At the same time,this paper also gets the following enlightenment:(1)the enterprise needs to evaluate itself objectively,do a good feasibility study on the subject of m&a,and formulate a scientific and reasonable strategy;(2)expand information channels,understand the limitations of financial statements,and pay attention to the contingencies or subsequent events;(3)select the appropriate payment method to reduce the financing payment risk;(4)in the integration stage,on the basis of understanding the complexity of the two parties' reorganization,the optimal integration mode should be designed to improve the m&a synergies.