The Financial Risk Research Of The Central Enterprises’ M&A In China

Central enterprises are state-owned enterprises directed by the State-ownedAssets Supervision and Administration Commission of the PRC (SASAC).Comparing with the other properties of the enterprise, central enterprises’ scale isbigger and they are more monopolistic. Central enterprises also master more abundantadministrative resources, so they are the core part of the economic lifeline of thecountry and an important force in promoting China’s economic and socialdevelopment. After the reform and opening up, China’s social economy keepsdeveloping, the central enterprises with the wave of economic growth have becomethe leading role of China’s overseas M&A. However, in the expected return is often ahuge latent risk of overseas M&A of central enterprises. Comparing with developedcountries, the history of M&A in the developed countries are over100years old,while China’s multinational M&A is still in the primary stage. Because of limitedexperience, the risk of overseas M&A is more outstanding. Therefore, we need tosummarize the past success and failure of central enterprises’ overseas M&A,especially analysing financial risk of overseas M&A in-depth and thinking the futureof central enterprises’ overseas mergers and acquisitions in order to provide a lesson.So, on the basis of researching the merger and acquisition of enterprises and the basictheory of the enterprises’ overseas mergers and acquisitions about the financial risk, Ihope the paper can provide ideas and practical advice about China’s centralenterprises’ overseas M&A.Through analysing China’s overseas M&A central enterprise financial risk andstudying China’s specific national enterprises overseas M&A case, establishingeffective risk mechanism of China’s central enterprises for overseas development ofthe guard has important theoretical and practical significance including improvingChinese enterprises overseas M&A risk theory, strengthening the overseas M&Aactivity of central enterprises and enhancing China’s central enterprises corecompetitiveness in the international market.Based on the theory of M&A and the financial risk of mergers, the paperanalyses the present situation of Chinese enterprises overseas acquisitions, describesthe motivation and interpretation and quantification of overseas M&A centralenterprise financial risk, constructing central enterprises’ overseas acquisitionfinancial risk evaluation system, and summarizing the prevention and control of the the financial risk overseas mergers and acquisitions. In addition, valuable suggestionsare finally pointed out and preventive measures and the central enterprises are takento prevent the financial risk of the central enterprises’ overseas mergers andacquisitions.In a word, the central enterprises’ overseas M&A is the only way which canrealize the internationalization of the central enterprises. At the same time, the centralenterprises must pay enough attention to risk. Therefore, construction of the financialrisk prevention and control system of central enterprises’ overseas M&A canstrengthen the risk management of central enterprises mergers and acquisitions,reduce the blind acquisition, improve the success rate of central enterprises overseasmergers and acquisitions, and ultimately finish the integration of internationalindustry chain. Besides, the construction also can develop the core competitiveness ofthe global ascension of central enterprises, make China’s central enterprises to becomethe real large enterprises in the world.