Research On The Construction Of Evaluation Index System For The Financial Integration Risks After The Mergers And Acquisitions

As an effective means of industrial restructuring and optimal configuration for economic resources, mergers and acquisitions has become one of the popular ways for enterprises to seek greater development. However, risks coexist with prosperity. The whole process of mergers and acquisitions involves considerable risks, especially the risk of integration after mergers and acquisitions. Hereinto, finance integration is the key to the success of mergers and acquisitions, as well as integration. It’s risk level concerns the achievement of mergers and acquisitions strategy, as well as the effect of early activity of mergers and acquisitions. Therefore, to do evaluation research on financial integration risks after corporate mergers and acquisitions becomes a very meaningful project.We should learn from the study of mergers and acquisitions, as well as integration by domestic and foreign academia, but, the study of financial integration risks and assessment of risk quantification is not so plentiful. Therefore, this article aims to construct a whole set of risk evaluation index system to apply scientific techniques and methods to identifying and evaluating finance integration risks effectively, which is of great theoretical and practical significance to improve the success rate of mergers and acquisitions of enterprises and reinforce the risk administration thereafter.This article is divided into three parts to investigate the construction and application of financial integration risk and its evaluation system after mergers and acquisitions.First of all, according to the effect of financial integration after mergers and acquisitions, identify the financial integration risks. Such risks consist mainly of six types, including risks in solvency, profitability, asset integration, development ability, financial mechanism integration and environmental risks brought by external finance-related factors. Specific analyses of the reasons, performances and harm of the risks have been done for each type of risk, which is the foundation and basis of the establishment of the risk evaluation system.Secondly, introductions of the construction of the financial integration risk evaluation system. On the basis of some certain principles, this article has selected a series of the most representative quantitative and qualitative indexes to form the appraisal system from the different perspectives which expose risks. These targets connect with each other and influence each other, which systematically and organically reflect the finance integration risks after mergers and acquisitions, and constitute the core and basic factor of risk evaluation system. Then use analytic hierarchy process (AHP) to endow selected indexes with certain weights so as to get the mathematical evaluative model of total risk.At last, explain the application of risk evaluation system. Through comparing a set of risk ranges of each index, M&A business can determine the degree of risk and the corresponding score of their own indexes, and they can calculate the overall level of risk of financial integration after mergers and acquisitions based on risk evaluation and management model mentioned before. The manager level can know the key risk areas and the development tendency of enterprise according to the results of assessment, then they can specifically take measures to prevent and reduce the risk level.In aspect of research technique, this article mainly adopts the method of theoretical research. After consulting literatures and books about mergers and acquisitions published in China and abroad, plus the author’s case-analyzing and self-understanding on the matter, a series of researches were done to study the financial integration risks after mergers and acquisitions; Besides, the methods such as factor analysis, normative analysis, a combination of quantitative and qualitative analysis and analytic hierarchy process, which were used to analyze and illustrate financial integration risks and its evaluation and control, are the essential support for the article.I hope this article can have a guiding significance of the enterprise which integrates finance after mergers and acquisitions, lower the risk in financial integration link, and improve mission success rate of enterprise mergers and acquisitions.