Research On Financial Risk Of Liaoning Fangda Merger And Acquisition Of ST HNA

As one of the fastest and most convenient means of enterprise expansion,M&A has always been a frequent economic activity,but it will bring certain risks,among which financial risks are the most prominent and difficult to control.Many enterprises intend to gain development through M&A,but they fail because of various financial risks.Especially in2019,the outbreak of the epidemic promoted the arrival of the opportunity for mergers and acquisitions in the aviation industry.However,this time point is both an opportunity and a financial risk that cannot be underestimated.Therefore,under the unfavorable external environment,it is particularly important to effectively identify and prevent risks.Based on the above background,this paper selects the case of Liaoning Fangda’s merger and acquisition of ST HNA,which has the characteristics of cross-industry,heavy debt and large amount of M&A funds.The author uses three methods: literature analysis,case study and accounting index method to sort out the theoretical concepts related to this paper by reading a lot of literature and books in the early stage,and analyzes the motivation of M&A based on the relevant theories and the selected cases,and analyzes its financial risks according to the three stages before,during and after the merger.Including pricing risk before M&A,financing payment risk during M&A,goodwill impairment risk after M&A,operational risk,risk of debt,etc.The financial risk brought by M&A to Liaoning Fangda is measured by financial data before and after M&A,and the financial risk is evaluated by entropy TOPSIS method.The results show that: Liaoning Fangda’s merger with ST HNA is facing enormous debt repayment pressure because of raising merger funds and HNA’s own debt problems;However,the adoption of a single cash payment method to pay the consideration leads to the need for Liaoning Fangda to supplement the cash flow needed for business operation through frequent equity pledge after the merger,which has caused certain liquidity risk;The poor earning capacity of ST HNA during the epidemic period and the decline in profits of the steel industry have had a certain negative impact on the current operation of Liaoning Fangda.Therefore,Liaoning Fangda’s merger and acquisition of ST HNA brought some financial risks to itself,including risk of debt.