On Financial Integration After Merger And Acquisition

Merger among enterprises is a kind of result of a Free Economy (also called MarketEconomy). The more advanced the economy is, the higher probability that merger occurs. Inthe Western countries, merger has over 100 years history. In our Country, since the merger ofBao Ding textile equipment factory and boiler factory with Bao Ding knitting equipment andblast equipment factory in 1984, there has been over 20 years merger history in China.However, it has been proven that the high failure rate after merger resulted from corporateintegration, especially financial integration, is a desiderated topic in academics. Under thiscircumstance, based on pervious research and study, this article is intended to further discussthe financial integration after merger.First of all, this dissertation studies the history and current situation of corporationmerger, the main reason of failure and the relation with corporation integration. Based on thediscussion of merger and integration theories, it discusses the theoretical base of financialintegration after merger.What is new about this dissertation is that it studies the whole process of financialintegration after the merger of corporation. Based on the theory of financial integration aftermerger, I discussed the process of financial integration. First of all, the financial investigationon the target enterprise prior to integration ought to synchronize to the financial analysis priorto the merger. We have to prove the authenticity of the financial statement of the targetcompany so as to acquire the true status of financial health. Secondly, we have to understandthe financial risk during the merger in order to determine the goal and model of financialintegration before moving into the process of integration. Thirdly, the article discussed howto integrate the internal and external financial structure.In this dissertation, I emphasized on discussing the internal financial structure includingone center, three 'in-place' and seven integrations. The seven integrations includes: theintegration of the goals of financial management;the integration of accounting checkingsystem;the integration of internal cash transferring management system;the integration ofmerit evaluation system;the integration of liability;the integration of the regulation offinancial management;and the integration of assets. In these seven integration, theintegration of regulation of financial management consists of:the integration of financialdepartment;streamline the system and function of financial management, and standardize thefinancial management system;The integration of assets consists of fixed assets, current assetsand intangible assets.At the end of the dissertation, I discussed that the key of a successful enterprise mergerincludes the through evaluation for the business before the merger, financial control after themerger and the fast integration.It has been proven that the enterprise after merger can only optimize the resourcesallocation, obtain core competence and achieve the ultimate goal of merger through aneffective financial integration.