The Risk Of Enterprise's Global M&A Activity

In recent years,against the background of “going global” and “Belt and Road Initiative”,to seek further development,Chinese enterprises engage in global mergers and acquisitions activities,which have been increasing day by day and playing an increasingly important role in business operation.As the automobile industry features automation,connectivity,electrification,and shared ownership(ACES),severer challenges are posed to auto parts companies.However,China's auto parts companies are generally undergoing slow development.Some advanced technologies are in the hands of developed countries,so many technical barriers cannot be broken through in a short time.Therefore,auto parts companies need to promote their strategic transformation and upgrading through global M&A activities.This article takes Joyson Electronics' acquisition of Takata Corp as an example and analyzes the merger and acquisition at the review stage,implementation stage and integration stage.First,risks at each stage are identified.The identification helps to clarify the main types of risks existing in mergers and acquisitions such as environmental risks,financial risks,and integration risks.Then comes to the analysis of the identified risks.Corresponding response measures are put forward to well control risks.This article focuses on the analysis of financial risks,such as valuation risk,financing risk,and repayment risk.The qualitative analysis is done based on the external environment faced by Joyson Electronics and its own development status,and the quantitative analysis is done based on the Z value and financial indicators in the balance sheet.Finally,illustrated in the case of Joyson Electronics,this article makes some clues for other Chinese companies to engage in global M&A activities and puts forward suggestions on company policies.Fo r instance,a company should pay attention to prospective study,clarify its strategic objectives,take precautions against environmental risks,reasonably select acquisition targets,optimize financial risk precautions,and make an all-round integration.