A Study On Exchange Rate Risk Management Of Chinese Enterprises' Overseas M&A

With the advancement of globalization and the intensification of market competition,more and more Chinese enterprises begin to acquire foreign brands,technologies and market channels through overseas mergers and acquisitions to improve their competitiveness.However,due to the economic,cultural,political and legal differences between different countries,there are huge risks in the process of overseas M&A and the integration stage after M&A.Exchange rate risk is a unique risk of overseas M&A.With the continuous expansion of the scale of mergers and acquisitions,the potential loss due to exchange rate risk is also increasing.How to avoid exchange rate risk and reduce exchange loss is the focus of M&A enterprises.Through the case study of Apex's acquisition of Lexmark,this paper explores the path of exchange rate risk management in the process of overseas acquisition.On the basis of summarizing domestic and foreign literatures,this paper firstly summarizes the basic situation of Chinese enterprises' overseas M&A and the common exchange rate risk management methods in overseas M&A.Then focus on the analysis of Apex's acquisition of Lexmark,and build an analysis framework of exchange rate risk management mode selection.According to the actual situation of M&A,this paper explores the exchange rate risk management measures adopted by Apex in different stages of overseas M&A and their advantages and disadvantages,and gives a case evaluation.The study found that Apex adopted a diversified approach in exchange rate risk management,mainly through financing methods and financial derivatives to manage exchange rate risk.But there are some disadvantages: No exchange rate risk hedging measures were taken in the stage of financing to payment,and the risk management time was relatively late in the stage of payment to repayment.Finally,the paper concludes that the exchange rate risk management in Chinese enterprises' overseas mergers and acquisitions is characterized by diversification and phasing.How to choose the way of exchange rate risk management is affected by several elements,which are outcome of forward exchange rate predicted by enterprises,amount and time span of merge and acquisition.At the same time,this paper also gives some suggestions for exchange rate risk management in overseas mergers and acquisitions of Chinese enterprises: strengthen the awareness of exchange rate risk prevention,build a perfect internal exchange rate risk prevention system;choose diversified financing methods and payment methods to avoid exchange rate risk Rational use of financial derivatives to hedge risks in order to provide reference for more companies.