Research On The Financial Risk Identification And Control Of Enterprises’ Overseas M&A

Reform and opening-up has gone through a forty-two year of ups and downs.Chinese enterprises have undergone tremendous changes under the struggle of several generations of entrepreneurs and a number of well-known enterprises with international competitiveness have emerged then.With the tide of economic globalization,Chinese enterprises begin to participate in international competition extensively,and the activities of overseas mergers and acquisitions(M&A)are more and more frequent.However,usually two countries are involved during the overseas M&A,the M&A enterprises need to face the differences of social and cultural environment,economic and political system,and legal supervision system between different countries,as well as a series of factors such as poor information exchange,difficulty in data collection,and information asymmetry between the two sides,which lead to frequent financial risks of overseas M&A.Meanwhile,due to the short time of overseas M&A and the lack of experience in identifying and controlling the financial risks of overseas M&A,the success rate of overseas M&A is low and the Chinese enterprises suffered heavy losses then.Therefore,it is relatively urgent to strengthen the identification and control of financial risks in overseas M&A at present.Taking Midea’s merger and acquisition of German KUKA Company in 2016 as a case study,this paper firstly summarizes the research status of financial risk of overseas M&A at home and abroad.Secondly,it introduces the related theoretical definition of overseas M&A and the related theory of financial risk of overseas M&A.Besides,the financial risks of overseas M&A are divided as the risk of preparation stage,the risk of implementation stage and the risk of integration stage and then the definition of risk in each stage will be introduced respectively.Thirdly,this paper analyzes the whole process of the overseas acquisition of German Kuka by Midea in detail as well as identifies the financial risks in the process of overseas M&A and illustrates the measures taken to control financial risks in the process of overseas M&A.Then,after comparing the vertical analysis of the financial data of Midea in several years before and after the M&A as well as the horizontal analysis about the mean value of the financial data of Midea Group and the top enterprises in the same industry,the control measures about the financial risk of Midea Group in the process of overseas M&A will be evaluated and suggestions will be put forward accordingly.Finally,this paper summarizes the financial risks and control measures of the overseas M&A activities of Midea Group as well as puts forward the corresponding suggestions to prevent the financial risks in preparation,implementation and integration stages of overseas M&A activities of Chinese enterprises,so as to provide ideas for the overseas M&A activities of Chinese enterprises to guard against financial risks,improve the success rate of overseas M&A,and provide support for the development of Chinese enterprises.