Study On M&A Process's Financial Risk Early Warning

During the 1990s, with the accelerating of information technology and economic globalization, to gradually replace the multinational creation by transnational M&A had become the dominant way of multinational direct investment. In 2008, the United States due to the influence of the subprime crisis. Global M&A market is not optimistic. Enterprise merger filled with risk, merger results are different operator's expectations. According to the statistics, the deal 50 to 70 per cent in 2 to 3 years and no brings to the enterprise value increment, fund revolving appeared solvency and main business ability dropped. With the prevalence of global mergers and acquisitions and globalization of financial markets, and the high proportion of mergers and acquisitions fail, the financial risk early warning field theory turn into financial hot spot. Many enterprises will face bankruptcy and liquidation of major financial risks, so the financial risk of M&A accurate analysis is not only an objective requirement for companies in the competitive market system but also a survive and development of the necessary protection in the implementation of M&A process. Therefore, using practical early warning indicators to establish a relatively complete M&A Financial Early Warning System has certain theoretical and practical significance.This article summarize enterprise merger of financial risk pre-warning studies the theory of financial risk, and puts forward the meaning of merger, overview merger of financial risk in the process of relevant theories. Analysis our country to be listed merger trends, and makes pricing, financing and integration of payment procedures as the actual merger clues, specifically the process of the different sources and effects of risk factors, which is based on the combination of theory of financial risk and early warning risk control framework. Establishing M&A Financial Early Warning System of the four subs on clear warning of financial risk to the police justice, the police find the source of financial risk early warning; warn signs of financial risk early warning, detection and prediction of the degree of financial early warning of the basic idea of the police. Aiming at this system analyzes our country to be listed merger and financial risk pre-warning system operating conditions.Existing enterprise merger financial risk pre-warning of research, this paper adopts factor analysis to deal with financial data, the number of variables factor selected is less than the original target, the selected variable factor variables have re-set the original structure, and factor explanatory variables have names that reflect most of the information of these original variables. Using the factor analysis method to extract numerous variable factors, irrelevant set M&A enterprise financial pre-alarming model composite index. And the efficacy coefficient method is used to determine warning degrees interval, relatively simple practical weighted average method more can reduce false alarm, improve the occurrence of leakage acquisition financial risk pre-warning system efficiency.