Study On The Prevention Of Financial Risks In Tran Snational Mergers And Acquisitions

In recent years,China has continued to increase its opening up,the establishment of the AIIB and the East Asia Free Trade Area,the further deepening of China’s integration with the world economy,and the introduction of policies to support the international development of Chinese enterprises.In this context,Chinese enterprises actively carry out cross-border M&A activities,and obtaining high-quality resources of foreign enterprises and opening up international markets through cross-border M&A has become a strategic choice and common means for many enterprises in China.According to EY’s 2021 Overview of China’s Overseas Investment,in 2021,the total amount of cross-border M&A transactions led by Chinese enterprises reached US$637 billion,accounting for about one-fifth of the total global cross-border M&A transaction value,and the number of transactions was 12,789,the highest value in history.However,due to the high complexity of cross-border M&A,Chinese enterprises engaged in cross-border M&A activities face a variety of risks,among which financial risks are the most complex and common.Therefore,how to comprehensively and prudently consider and prevent financial risks in the process of cross-border M&A is crucial to ensure the successful implementation of cross-border M&A.A complete cross-border M&A usually includes three stages: pre-merger preparation,merger implementation and post-merger integration.Based on referring to a large number of relevant literature and statistical data,this paper finds the common problems of Chinese enterprises engaged in cross-border M&A activities,determines the research direction and focus,and conducts in-depth research on financial risks and risk prevention at different stages of cross-border M&A under the guidance of relevant theories of financial risk prevention.The research content is divided into two parts: the first part summarizes the concepts and theories related to cross-border M&A financial risk prevention,including the connotation,types,prevention objectives and prevention principles of cross-border M&A financial risks.The second part is a case study,in which Shenzhen Guanghetong Wireless Co.,Ltd.(hereinafter referred to as Guanghetong),a representative of China’s communications industry,is selected to analyze the financial risks faced by Guanghetong in this cross-border M&A transaction with its acquisition of the vehicle business assets of Canada Sierra Wireless Company(hereinafter referred to as Sierra Wireless)in 2020 as a research case.Firstly,the manifestations of financial risks in the process of M&A are analyzed,and then the F-SCORE model is used to verify the financial risk status before and after the merger and acquisition,and the relevant indicators affecting the financial risk of the cross-border M&A are evaluated by the factor substitution analysis method,and the specific factors and the degree of influence affecting the financial risk are found,and finally the preventive measures and suggestions for the financial risk in the process of cross-border M&A are proposed by combining case analysis and related theories.This paper studies the whole process of cross-border M&A of Guanghetong and concludes that complex and diverse financial risks are the main factors affecting the success rate of cross-border M&A of Chinese enterprises,and effectively preventing financial risks in the M&A process can help enterprises achieve M&A goals.On this basis,it is enlightened to put forward targeted preventive measures and suggestions for Chinese enterprises to carry out cross-border M&A financial risk prevention work,which is of practical significance for enriching and improving the theoretical system of cross-border M&A financial risk prevention of Chinese enterprises.