Research On Overseas M&A Risk Of Chinese Enterprises

Recently,with the prosperity of Chinese economy and the increasing degree of economy globalization,more and more Chinese companies start to conduct Cross-border M&A.Usually the Cross-border M&A happens between two or more different countries,The differences of their politics,culture,legislation,supervision,market environment sometimes make the situation of asymmetric information.Compared with domestic M&A,there are more types of risks.Meanwhile,Cross-border M&A activities usually are carried out in a larger scale,therefore the risks of Cross-border M&A are more in quantity.Among all kinds of risks,financial risks have remarkable impact on overall process of M&A.There are a lot of failed case of Cross-border M&A resulting from the inaccurate valuation,inappropriate financial methods,etc.So the prevention of financial risks is vital to Cross-border M&A.This paper selects the M&A between MIDEA and KUKA as case study object.Firstly,this paper sorts out the current researches,related theories and concepts of M&A and then analyze systematically KUKA's financial condition;then classify financial risks into valuation risk,payment risk,exchange rate and interest rate risk,integration risk;then analyze risk control measures and put forward suggestions;finally,based on analysis above,make some suggestions for Cross-border M&A of Chinese enterprise in the future.The results of this paper shows financial risk of M&A between MIDEA and KUKA mainly lies in valuation risk and payment risk.Besides,because of the fluctuation of international economy,there are exchange rate and interest rate riskin this transaction.In the case of risk control measure,MIDEA take much effort to deal with valuation risk and payment risk but pay less attention to exchange rate and interest rate risk.Through the study of this case,risk control measures can provide reference for other enterprises to better control overseas M&A risk and increase probability of successful M&A.