Research On Cross-border M&A Financing Risk And Control

Under the influence of a series of regulatory policies,strict domestic capital outflows,and the tightening of cross-border M&A audits by Chinese companies in overseas markets such as the United States and Germany,the cross-border M&A market has gradually cooled down,and trading activities have become increasingly mature and regulated,especially in real estate and The number of cross-border mergers and acquisitions in sensitive or restricted industries such as entertainment has been significantly reduced;at the same time,private enterprises have gradually become active players in cross-border mergers and acquisitions,and they are more difficult to obtain financing than state-owned enterprises in the context of severe environmental conditions.Cross-border M&A financing is even more important to them.In this context,Zhonghong shares as a real estate company to achieve its "real estate + tourism" strategy,in June 2017 to acquire overseas high-end travel service company A&K.Because both the M&A entity and the M&A target belong to the sensitive or rest ricted industries,Zhonghong's application for the withdrawal of funds from the ODI has not been approved,so Zhonghong shares obtained the overseas financing completion price through the “fundamental real debt” at a higher cost of capital.Payment and delivery.Based on the capital structure theory,this paper finds that there are debt repayment risks,financing quota risks,exchange rate risks and liquidity risks in the process of merger financing.The financial leverage coefficient,Z-scoring model and F-score model are used to quantitatively evaluate the company's risks.The study found that Zhonghong shares faced high risk of bankruptcy,especially after the acquisition of A&K by listed companies in 2017.The performance of Zhonghong shares fell sharply.In the context of high risk,Zhonghong shares adopted risk aversion,risk transfer and risk retention for this merger.Three risk control measures,but the risks remain within the listed company group and have not been transferred to third parties;therefore,this paper gives cross-border M&A financing risk control recommendations,including rational selection of financing strateg ies,reasonable pricing,prevention of exchange rate fluctuation risks and strengthening Working capital management,which has reference to other companies' cross-border M&A financing.