On Financial Risk Control Of Transnational M&A Of Internet Enterprises

With the international development of China's Internet companies,cross-border mergers and acquisitions have gradually become an important way for enterprises to further expand.According to statistics,the number of cross-border M&A transactions in China's Internet industry has ranked among the top three in the world for three consecutive years.However,less than 30% of cross-border mergers and acquisitions can achieve better results,and the failure of M&A activities is inseparable from the financial risks.It can be seen that strengthening the control of financial risks of cross-border mergers and acquisitions is very important for the further development of Internet companies in China.Based on this,this paper combines the classic case of Tencent's acquisition of Supercell to study the financial risk control of cross-border M&A of Internet companies in China.This paper uses case analysis method,and Tencent acquires Supercell as the case study object,and studies the financial risks existing in the cross-border M&A process of Internet companies,the risk control measures adopted by Tencent and the effects of these measures.The text is divided into five parts.The first part introduces the background and research significance of the topic,and summarizes and summarizes the relevant literature on M&A financial risks at home and abroad,including cross-border M&A risk categories,risk identification and risk control.The second part defines the financial risks of cross-border mergers and acquisitions and cross-border mergers and acquisitions,and expounds the relevant theories used in this paper,including internalization theory,synergy theory,information asymmetry theory,managerial arrogance hypothesis and risk management theory.The third part introduces the basic situation of the merger and acquisition,then analyzes the motivation of the M&A transaction,introduces the process of M&A and some details of the M&A plan,and compares the Internet industry with other industries in terms of cross-border M&A.The particularity of the merger was elaborated.Finally,it analyzed the various financial risks and risk causes faced by Tencent in the early,middle and late stages of the M&A activity,including the strategic risks and valuation risks before the merger,and the financing risks in the M&A.And the risk of payment and the risk of financial integration after the merger.The fourth part is the core chapter of this paper.It focuses on the risk prevention and control measures taken by Tencent for the above five financial risks and the effects.In response to strategic risks,Tencent has carried out a full-scale analysis of the industry and improved the Group's environment.From the results,Tencent's market share and revenue capability in the mobile game field have been improved to some extent;Tencent conducted sufficient due diligence and selected a more reasonable valuation method.Compared with the financial indicators of other companies in the mobile game industry,combined with the performance of the acquired party itself,the pricing is relatively reasonable,which reduces the valuation risk to some extent.In response to financing risks,Tencent reduced the cost of mergers and acquisitions through the consortium financing mode,and at the same time,it has the effect of isolating risks.Tencent selected cash instalments for payment risks.Although the amount is large,Tencent did not encounter significant cash flow liquidity risk.It is worth mentioning that Tencent did not take appropriate risk prevention measures in terms of exchange rate fluctuations;for financial integration risks,Tencent retained the autonomy of the acquired party,from Tencent's own share price and the profit of the acquired party.In terms of ability,integration is more successful.In addition,this paper uses F-Score model and Z-value model to quantitatively analyze Tencent's overall financial risk indicators before and after mergers and acquisitions,and also uses AR and CAR to analyze the market reaction of four key time points in the M&A process,and further provide the conclusions of this paper.in accordance with.The fifth part is the policy suggestion.According to the research results,this paper puts forward five suggestions,including clarifying the development prospects of the enterprise,formulating a reasonable plan,perfecting the due diligence system,signing the gambling agreement,establishing the indirect transaction structure,diversifying the financing methods,and selecting the best.Payment methods,prevention of exchange rate risks and development of flexible M&A plans,and introduction of financial sharing.Through the research on Tencent's M&A case,this paper finds that most of the measures taken by Tencent in preventing financial risks of cross-border M&A have produced good results,but there are still some shortcomings.It is hoped that the research in this paper can provide some reference for the financial risks faced by other Internet companies in China in cross-border M&A,so as to help them adopt more scientific and reasonable financial risk prevention and control measures and improve the success rate of cross-border M&A.From the perspective of risk,this paper tentatively explores the intrinsic motivation and risks of companies abusing suspension,and provides research support for listed companies to make proper use of suspension system and improve suspension system.At the same time,it reveals the risk results of suspension from multiple perspectives,which has reference value for shareholders,listed companies,financial investment institutions and capital market,and has important practical significance and application value for enriching theoretical research on suspension and improving relevant systems.