The Research On M&A Value And Internal Control Of Mergers And Acquisitions

With the promotion of economic globalization, corporate mergers and acquisitions activities are developing quickly. M&A transactions are increasingly becoming an important way of enterprise to develop its market share and access to external resources. However, due to variety reasons, most M&A transactions have ended in failure, which led to follow questions: what is the nature reason of the failure? What are the risks of M&A transactions? Where are these risks concentrated in? How to divide the M&A activity and identify certain risks? And how do we control these risks? Thus, the research of above questions has central practical significance.This paper studies research from Literature review of internal control and mergers and acquisitions. On this basis, the paper focused on defining M&A process, analyzing risk identification, assessment, prevention and management in each stage of M&A activities. For all aspects of risk that may be encountered, the enterprises should focus on building M&A internal control system to ensure the smooth of M&A transactions, and to protect the realization of the M&A value.This paper argues that M&A activities should be divided into three stages: decision-making, take over, and integration. And further they can be divided into M&A preparation, due diligence, transactions negotiation and implementation, change board, assign operating managers, change legal procedures, form integrated teams to develop and communicate integration plan, and integration of business resources. Based on the COSO-ERM framework, the paper uses its four goals and eight elements in M&A process to establish a M&A internal control system from strategy (M&A decision-making) to implementation (M&A took over, integrated, and assessment).This paper obtains data from questionnaire to do empirical analysis of M&A value between internal control and finds that a positive correlation between M&A value and internal control. And in the M&A internal control system, the control of integration achieve the greatest impact on M&A value.This paper designs a structural equation model to analyze the relationship between various elements in internal control system and their impacts on the value of M&A. We find that the quality of the former internal control process will impact the next control process. And also we discover the main four internal control factors on M&A value: the independence of management, decision making control, take over control, and integration control. Among four elements, the impact of integration control on M&A value is the largest, and the other three works through the integration control.