The Risk Aversion Of The Overseas M&A Of Chinese Enterprise In The Perspective Of Intelligence

With rapid economic development of China, Overseas Mergers and Acquisitions (M&A) becomes a very important development strategy for more and more Chinese enterprises. Overseas M&A helps Chinese enterprises to acquire advanced technology, excellent management experience and a wealth of resources in a short period of time, therefore, Chinese enterprises are eager to follow the road of the Overseas M&A. Because of the outbreak of global financial crisis, a lot of foreign companies are undervalued and there are some salable and valuable enterprises emerging in the international market. Overseas M&A is considered to be a powerful motivation to Chinese enterprises. Unfortunately, the high failure rate has been disturbing M&A in the risk management processes of those enterprises.It is intelligence that provides decision-makers the information as their eyes and ears in the competitive market environment. By analyzing the external circumstance and operation situation, intelligence can provide decision-makers a clear understanding of the prerequisites of the M&A strategy. To circumvent the risk, which may rise in the stage of making the M&A strategy, decision-makers must draw up suitable strategies to match the prerequisites. Thus, decision-makers need intelligence to provide a strong support to achieve the intended objectives with the diverse risk.This thesis focuses on the risk management activities in the field of Overseas M&A with a view of intelligence and tries to analyze the value of intelligence research in this process. Utilizing the basic principles of intelligence theory and methods, this study systematically analysis the process of risk management about overseas M&A of Chinese enterprises, which is consisted of risk producing mechanism, risk identification and early warning, risk quantified evaluation and risk control evaluation. In this thesis, intelligence was treated as an integral part of the whole risk management process of overseas M&A of Chinese enterprises. In order to identify and averse the risk, we must enhance the participation of the intelligence work in the risk management activities of overseas M&A. This thesis also analysis several cases, which got failure in the Overseas M&A process because of ignoring intelligence, to reflect the value of intelligence work.Starting with the analysis of risk Formation mechanism, Chapter Three discusses the risk issue of different stages of Overseas M&A. These risks not only include political risks, legal risks, natural disasters, etc., which exist on the external surrounding, but also contain decision-making risks, transaction risks and integration risks, which are closely related to the enterprises themselves. In Chapter Four, a risk identification framework, which based on the analysis of weak signals identification, was established,. It gives brief comments about several commonly used risk identification methods. On this basis, the last part of Chapter Four illustrates the role of intelligence in the early risk warning. In fact, intelligence runs through the whole process from identifying of the warning source to defining warning degree. Chapter Five launches a quantified evaluation research about risks of Overseas M&A on the foundation of risk identification. A risk quantitative evaluation index system was designed based on the level of uncertainty, the degree of influence and controlled.In Chapter Six, a relatively new idea about intelligence intervention was raised. According to the different stages of M&A risk management activities, this thesis studies various aspects of intelligence issues in M&A. On the stages of target enterprise searching, enterprise valuation, M&A risk assessment, M&A target selection, acquisition financing, this thesis discussed the application and analysis of intelligence. In addition, to use the intelligence relative method, the study also attempts to introduce some methods form other discipline to expand the research of intelligence. For instance, two-dimensional decision-making table was established according to the rough set theory in the phase of choosing target enterprise. Digital pretreatment was made by means of the applied flow chart of rough set, and simplifications of attribute and attribute value were emphatically conducted with the help of the simplification of rough set. The redundancy of the decision-making table was effectively eliminated by the data analytic method in order to choose knowledge auxiliary decision-making. Screening out the object of Overseas M&A with rough set theory could provide knowledge support and effective intelligence for policymaker so as to show the information behind the numbers, which helps to enhance the accuracy of object selections for Overseas M&A.At the last part of this thesis, we discuss the connotation of intelligence failure as well as its predisposing factors:decision-makers, organizations, the quality of intelligence products and intelligence culture. Chapter Eight enumerates the strategy of risk aversion and the suggestion of intelligence research in the Overseas M&A process of Chinese enterprises.Overseas M&A is a systematic project, by systematically acquiring and analyzing data, information which contributes knowledge to the project. Intelligence not only establishes but also maintains a long-term competitive advantage. It is the motivation and objective of this study.