The Risk Analysis And Prevention For Chinese Enterprises’ Cross-border M&A

After experiencing the 2008 financial crisis and the slow recovery in recent years, Chinese enterprises set off a new round of overseas M&A wave. Under the background of economic globalization, "going out" strategy is still an open magic to break new ground for more and more outstanding enterprise. The execute M&A strategy to expand the scale, get resources, build brands and so on. However, the risks arising from cross-border mergers and acquisitions also go hand in hand. Political and legal risks from acquisitions countries, the financial risk from the merger transaction itself, integration risks after the merger completion, which if not handled properly will give Chinese companies a fatal blow. So, how to make Chinese enterprises to enjoy the opportunities brought about by mergers and acquisitions, while, to avoid the risk of possible acquisitions has become an important part for all the M&A transactions. And it is also a key level to continue the process of internationalization for Chinese enterprises in the future.This article takes the example of Shuanghui and Smithfield to explore the merger of risk identification, evaluation and prevention, hoping to find out the measures to avoid the risks and to improve the success rate of M&A activity. The first chapter introduces the background and current situation of Chinese enterprises overseas M&A, and reviews the cross-border M&A risk definitions and types in past papers. T The second chapter summarizes the risks of cross-border mergers and acquisitions, including cross-border mergers and acquisitions motivation, foreign direct investment theory and internal and external cross-border M&A risk categories. The third chapter mainly makes the Shuanghui merger systematic review, clarify facts of transactions and the driving force of both sides. The forth chapter is the key sections of this paper. Based on the cause and effect of the transaction, this chapter uses qualitative and quantitative analytical framework for merger risk one by one which contains detailed analysis and discussion. And in the end, this article makes the appropriate preventive recommendations to deal with the risks mentioned in this article, hoping to give reasonable suggestions to Shuanghui and other Chinese companies for future transactions so that the success rate of M&A will increase. Chapter five summarizes the whole idea of this paper including the thesis, the main point and the conclusions. The paper presents that Chinese enterprise should pay full attention to cross-border M&A, use various resources properly to prevent risks and reduce potential losses.