Research On Financial Integration Chinese Companies After International M&A

With the gradual acceleration of economic globalization, more and more enterprises turnto the international market, in order to obtain resources, technology and other factors ofproduction to improve their own core competitiveness. Especially since2008, with theoccurrence of the subprime crisis, overseas mergers and acquisitions of domestic enterprisesshow the trends that the scale of investment is growing and the investment range has beenwidely increasing. However, according to authoritative statistics, the domestic enterprisesoverseas mergers and acquisitions’ success rate is only about30%.What causes low success rate of the completion of the acquisition? This mainly involvestwo aspects. First, the merger is actually a two-way choice between enterprises, corporatemergers and acquisitions sometimes raise enough funds merger, but in the end the existence ofrivals leads to the failure of mergers and acquisitions. Secondly, enterprise successfullypurchases the target enterprise, but the possibility of hardly getting along with each other maycause the failure of mergers and acquisitions in the following operating period-this is thefailure of integration after the merger. The enterprise should cover the huge cost after mergersand acquisitions. Therefore, in order to achieve the merger synergies, the enterprise must relyon the successful integration. However, financial integration is an important part of theintegration after M&A, which is also the main content of this thesis.After mergers and acquisitions, financial integration involves all aspects of financialcontents of the group company and the sub company. The financial integration which thisthesis is going to talk about is the integration of the acquiring party’s financial system,accounting system, internal control and performance evaluation system, in order to unify thecompany after the merger in business, investment and operation and management.According to the overall research thought of asking questions, analyzing and solvingproblems, this thesis is closely integrated and each part is more logical and has the value of being referenced. The thesis bases on the introduction of the theory of financial integration,analyzing the problem of neglecting the importance of the financial integration and theineffectively unifying of acquisition and integration. Then, the thesis materializes theanalyzing object, through detailed analysis of the effect of Geely acquisition of Volvo,targeting the problems that have been put forward countermeasures, hoping this will help toimprove the success rate of mergers and acquisitions. This thesis consists of five parts:The first part is the introduction. This part introduces the financial integration researchbackground and significance after the current cross-border, bringing in a brief discussion ofthe current research on this topic at home and abroad, and the main writing ideas, researchmethods are then summarized.The second part is the basic theory of financial integration after enterprise transnationalmerger and acquisition, elaborating on the need for cross-border financial integration,principles and content specifically, for the detailed description of the following seven aspects,the objectives of financial management, financial management system, accounting system, theinternal control of cash flow, performance evaluation and examination system and the assetsand liabilities.The third part is the analysis of the problems and causes of the financial integration ofChinese enterprises transnational mergers and acquisitions. Aiming at the current situation ofthe China’s enterprises cross-border mergers, this part explores the problems of lacking oftactic programming, the defects and the unsatisfied effect of integration in the processing. Bythe means of analyzing and summarizing, this thesis owes the problem causes to the blurredformulation of the goals, the few attentions given on the financial integration and the shorttactic insight.The fourth part is the risk analyze of Chinese enterprise multinational financialintegration. The problem is the result of risk factors. So while studying the existing problemsof financial integration, we must effectively identify the risk factors, and prepare for avoiding the risk in time. In the article, financial risks can be analyzed from two aspects: controllablerisk and uncontrollable risk.The fifth part analyzes the effect of financial integration after Geely acquisition of Volvo.Basing on this case, this part gives an introduction of its integrated financial consolidationmeasures and the critical points during the merger process, and then breaks the financial indexsystem based Scorecard evaluation model, making a comprehensive and objective evaluationfrom the post-merger financial integration of the financial dimension, the strategic dimension,human resources dimension and cultural dimensions.The sixth part is the Chinese enterprises to optimize cross-border financial integrationstrategy. Analyzing from an overall point of view, starting from the possessed financialrelation, this part gives some summarizing conclusions on optimizing the company’s financialintegration, and reminds companies of making tactic goals and adopting risk avoidingmeasures.On the foundation of the previous study, this thesis quotes the latest statistics to makeanalyses on the financial aspects of the case of Geely acquisition of Volvo. CombiningGeely’s all kinds of measures conducted in the process of operating, the thesis explains thereasons for the change of financial index. In addition, under the guidance of the thought ofproblem orientation, in order to solve the problem more pointedly, while excavates the causeof the problem, this thesis also takes a deep concern on the possible risks existing in theprocess of merger to directs the company to avoid risks effectively and lowers the rates ofpopping series of problems.