Financial Risk Analysis Of T Company’s Merger And Acquisition Of S Company Based On Analytic Hierarchy Process

Merger and acquisition has been playing an important role in contemporary economics,business administration and management research,and has also attracted the attention of the capital market.In order to expand their business scale,modern enterprises adopt the method of M&A,which not only improves the competitiveness of the acquirer in the market,but also brings objective economic benefits.In this case,Internet enterprises also develop rapidly.Companies can take advantage of mergers and acquisitions as a means to solve their own development problems to achieve expansion and growth,or they can sell shares or assets to solve internal financing or management problems.M&a itself is an important means and opportunity for enterprises to optimize resource allocation,solve internal development and business expansion and growth,as well as a game among enterprises,enterprise management teams,stakeholders and other participants.It is worth studying and analyzing from the perspectives of economics,corporate governance,human resource management and organizational management.In order to better development of enterprises,the domestic Internet industry is brewing a new round of merger and integration.In September 2013,company T acquired company S,which involved a huge amount of money.Until 2021,company T announced the acquisition of company S and completed the formal handover,which led to the financial risks of enterprise mergers and acquisitions.Based on analytic hierarchy process(AHP)and fuzzy comprehensive analysis method,this paper uses risk management theory,information asymmetry theory,synergistic effect theory and fuzzy theory to study the case of company T’s merger and acquisition of company S,and identifies and analyzes the possible financial risks caused by the merger from the perspectives of valuation,financing,payment and integration.The three giants in the Internet industry are company T,Baidu and Alibaba respectively,so the excellent value and good value of the industry are added in the identification of financial risks for comparison with company T.In the process of valuation risk,company S is valued by combining sales percentage method and discounted forecast cash flow method.The value of company S enterprise is estimated to be $906 million,far exceeding the $448 million of company T’s acquisition of company S,indicating that the acquisition is beneficial to the development of enterprises,but there are hidden valuation risks.Therefore,a financial risk assessment framework is established,and qualitative and quantitative analysis is carried out with the help of analytic hierarchy process and fuzzy comprehensive evaluation method.Finally,conclusions and suggestions are drawn.The analysis shows that the hidden risks in the aspect of valuation risk are caused by information asymmetry,lack of comprehensive analysis of the existing resources of company S,limited valuation methods,and lack of comprehensiveness and science in the valuation process.The financing risk is due to the single financing channel,the financing structure is unreasonable,the asset-liability ratio rises;Payment risk is due to the imperfect payment plan,unstable cash flow,excessive use of cash payment;The integration risk is due to the different ways of operation,the lack of a relatively perfect financial integration system,the integration of human resources is difficult.The research concludes that the financial risk of company T’s merger and acquisition of company S belongs to the general financial risk.The suggestions are as follows: First,avoid valuation risks.In the face of valuation risks,it is necessary to conduct a comprehensive investigation on the asset quality and resources of the target company,select a reasonable valuation method,and make a reasonable pricing of the target company;In the face of the financing risk,we should reasonably plan the financing structure and use a variety of financing ways and channels for financing.The third is to control the payment risk,in the face of payment risk to flexibly use a variety of payment methods,reasonable arrangement of payment time,choose effective repayment method;The fourth is to prevent integration risk,in the face of integration risk should establish a perfect financial integration system,reasonable planning resources integration process,formulate scientific strategy,strict control of integration process.Finally,research deficiencies and prospects.This paper summarizes the limitations of the study and puts forward the direction of improvement.Merger and acquisition is a complex systematic project,the personnel involved must be treated carefully,financial risk evaluation is the core,financing is essential,may affect the success or failure of merger and acquisition.