Risk Analysis Of Cross-border M&A Of China Enterprises

With the sluggish economy overseas,continuously increasing downward pressure of RMB and the urgent transformation for domestic economic structure,most of the industries in China have entered a key period of upgrade and transformation in the past year of 2016,a growing number of Chinese corporations hoping to realize large-scale integration through merge and acquisition.Therefore,cross-border M&A explodes among Chinese companies in 2016.However,success rate of M&A cases is low while the total number of cases is increasing year by year because of the pre-decision strategic risks,financial risks,pressure from host countries and the integration problems after M&A.As a result,it is particularly important for corporations to realize that what kind of risk they may encounter during cross-border M&A,which risk has a greater influence on the results of M&A and how to prevent various risks during transactions.All of those also become the areas that companies to learn and explore.This thesis carries out a detailed analysis of Lenovo's acquisition for IBM PC business with the combination of qualitative analysis and quantitative analysis.In the aspect of qualitative analysis,with Lenovo's annual report from 2005 to 2014 as data support and the combination of corporation micro-analysis and industrial macro-analysis,the author finds three kinds of risks that Chinese corporations are faced with in M&A,i.e.strategic risk,transaction risk and integrated risk.In the aspect of quantitative analysis,the authors uses fuzzy analytic hierarchy process and defines strategic risk,transaction risk and integrated risk as the criterion layers which are refined into ten index layers.The authors utilizes these layers to build a risk evaluation matrix,carries out consistency check,calculates the risk level of each risk factor through fuzzy evaluation and finally gets the weighted mean of risk level of the M&A cases.The risk level score of Lenovo's acquisition for IBM is 76.47,which indicates that the success rate of this acquisition is high.