Study On The Financial Risk And Prevention Of Merger And Acquisition Of Internet Enterprise

With the vigorous development of the Internet industry and the gradual segmentation of the online market,the early entry enterprises will enter the mature stage,not only through the new concept and technology to get the market,but also through the investment activities of mergers and acquisitions to occupy the market.But there are many risks,of which the financial risk is the most prominent,which runs through the whole process.By researching the literature at home and abroad,I find that our country has little research on the financial risk of M&A in Internet industry.How to reduce the financial risk of M&A enhances the chances of becoming more successful.This paper selects Ctrip acquires Qunar to analyze the financial risks of M&A and the prevention measures.Firstly,it describes the background and meaning of this research.Then,it organizes literature review to define the Internet and its characteristics,corporate mergers and acquisitions,financial risk and financial risk of M&A concept.Finally,analyze the motivation,procedure,financial risks and its prevention of this example.The financial risk is mainly from three aspects.The first aspect is the risk of assessing the valuation of Qunar.The large proportion of asset-lite of Qunar is hard to be assessed,and the assessment of Internet business should consider non-financial data,which will affect the overvaluation probability and will lead to higher risk of impairment of goodwill.The second aspect is the financing and payment risks,the main raise channel of Ctrip is issuing shares in the early,with the increasing of investment activities,the financial risk is increased.And the convertible merger of Ctrip will further dilution.The third aspect is financial integration risk,which is mainly reflected in the poor performance of each financial indicator,and the conclusion of F-Score Model also confirms the financial risk is increased.And summarizes Ctrip's preventive measures about the three aspects of risk,aiming at reducing the financial risks arising from mergers and acquisitions of Internet companies.Through the financial risks arising from Ctrip merged with Qunar,this paper puts forward suggestions for Internet companies to prevent financial risks of mergers and acquisitions.Before the acquisition,the acquirer should investigate the basic situation,industry environment,financial data and non-financial data,and optimize the measurements of assessing the valuation of the acquiree,such as the measurement which will consider the number of users or network node.During the acquisition,diversified financing channels,and select the appropriate mode of financing and payment,the acquirer should control the proportion when use convertible merger method to prevent hostile takeover.After the acquisition,the enterprise should realigned their strategy,not only can use the resource as fully as possible,but also can enhance user stickiness,so that the two companies to better development.