Financial Risk Analysis And Prevention Of Rongchuang China's Merger And Acquisition Of Wanda Culture Tourism Project

In recent years,mergers and acquisitions have been widely used as an important way for real estate enterprises to achieve multiple objectives such as resource reorganization,synergy and low-cost access to land resources,at the same time,M&A has the following advantages: reducing the investment amount,helping enterprises to enter the new market quickly,obtaining new profit points,reducing business risks,etc.It has irresistible attraction to real estate enterprises,therefore,mergers and acquisitions here,are becoming more and more popular,and related cases are increasing year by year.However,the acquisition activity itself is double faced.Enterprises can gain profits from successful M&A activities but also need to pay for the failure.In addition,real estate enterprises are facing the development dilemma of government's high-pressure regulation and control,and the financial risk of M&A are increasingly,and the domestic scholars' research in this field started relatively late,so domestic enterprises lack systematic operation to guard against financial risks in M&A,and can not reasonably avoid the financial risks they may encounter in M&A.Therefore,there's more necessity to study the financial risk of M&A and its preventive measures.This paper takes the case of Rongchuang China Holdings Co.,Ltd.(hereinafter referred to as Rongchuang)in July 2017,which spent 43.844 billion yuan to merge Wanda Cultural Tourism Project(hereinafter referred to as Wanda Wen Tourism Project)as an example to study the financial risks of merger and acquisition and its preventive measures.In the preface of the paper,the author first introduces the paper's background and the significance.Secondly,this paper discusses the research contents and methods,the research on financial risk of M&A by scholars at home and abroad,and the related basic theories.Then,this paper combs the basic situation of both sides,the motivation and the basic process of this M&A activity.Then there is the analysis procedure which is divided into two parts.The first part classifies the financial risks that Rongchuang undertakes in the process of M&A into four categories: valuation risk,financing risk,payment risk and integration risk.In this part,this paper collects the information of Rongchuang's annual report from 2014 to 2018,and analyses financial risks that Rongchuang bears through simple calculation and chart method.The second part further analyses the risk prevention measures taken by Rongchuang against the above four perspectives.The last part come to the conclusion,and the above analysis results are extended to the industry,besides the suggestions are put forward for the management and control of financial risks in M&A of other real estate enterprises.At the same time,the importance of preventing financial risks in M&A is emphasized.