Research On The Financial Risks And Risk Control In The Process Of M&A In Steel Industry

Mergers and acquisitions(M&A)is divided into enterprise annexation and enterprise acquisition.With the deepening of economic globalization,M&A has gradually become an important way for enterprises to expand their own scales and a ubiquitous way in the process of production capacity reform for iron and steel enterprises in China.Based on the guidance of the national policy and aimed at enhancing their overall strength,removing excess capacity and reducing product costs,China's iron and steel enterprises take the form of mergers and acquisitions to upgrade the industry and achieve the optimal allocation of social resources.However,various risks have been gradually exposed in the process of mergers and acquisitions.Market risk,legal risk,financial risk and many other risks may arise in the process of M&A,among which financial risk is the key factor which could affect the result of the whole M&A process.To effectively reduce the financial risks,on the basis of in-depth study of existing research results at home and abroad,and according to the theory of risk management,financial synergies,undervaluation and other related theories,the paper analyzes and summarizes the financial risks which may exist in the process of mergers and acquisitions,including the risk of mergers and acquisitions object value evaluation,the financing risk,the payment risk and the integration risk.Then,some related risk prevention suggestions are put forwardSecondly,this paper analyzes the case of Baosteel's acquisition of Wusteel,and concludes the actual financial risks and the corresponding preventive measures in the process of M&A.According to the case,the paper summarizes and analyzes the possible financial risks in the process of M&A in China's steel industry and put forward relevant suggestions.