Financial Risks And Control Measures Of Listcos' M&A

M&A is a key approach of enterprises'foreign investment and accelerating development. With the continuous improvement and development of our security market, the Listocs'M&A has become the leader of our M&A market, and the functional advantages of resource allocation and value discovery of capital market enables the numbers and size of Listocs'M&A to become larger and larger with more and more various of M&A approaches. However, the success rate to date is still low, which indicates that M&A contains significant risks as a special investment approach. Therefore, the fully analysis on the risk of Listocs'M&A, especially on the financial risk as the comprehensive influence by all types of risk, is of importance in enhancing the success of Listocs'M&A.Through the status analysis of Listcos'M&A in China, this thesis puts forward that financial risk is not only the financing risk in traditional concept, the definition of connotation should be wider, including all of the risks of financial deterioration during the process of pricing, financing, payment, integration. In addition, the thesis has explained that the causes of the M&A risks are the uncertainty of the factors, information asymmetry and M&A motivation blindness. Based on analysis, the thesis concludes 5 financial risks in the Listcos'M&A according to three stages of M&A: pricing risk, contingent cost risk, financing risk, liquidity risk and integration risk, and puts forward that the evaluation of financial risk should hold overall analysis framework, i.e. analyzing through three aspects including financial analysis, operation environment and strategic analysis, legal and compliance analysis of enterprise behavior, with evaluation approach of the combination of single variable judgment model and comprehensive evaluation.Combining the case studies from the practice, the thesis puts forward the measures to keep away the financial risk in M&A: restraining the influence of information asymmetry through detailed due diligence before M&A, increasing scientific characters of decision through feasible research system established during the decision-making process, improving financing and fund management, enhancing M&A process control, establishing confidentiality and compensation mechanisms and coordinating the relationship of interest related parties as well as enhancing M&A integration to control M&A total cost. Also, it brings forward that it should sufficiently exert the professional efforts of intermediaries during the M&A process. The thesis applies the combined research approach by empirical research and normative research, in order to provide beneficial reference for the Listcos'M&A activities in China.