Study On Financial Risks In Mergers And Acquisitions Of The Internet Industry

Since the 21st century,the Internet industry began to lead the trend of the times with the progress of science and technology and innovation.Internet has brought a huge impact to people’s life.Taobao,WeChat,Alipay and other Internet applications have greatly enriched and facilitated people’s lives.With growing competition of the industry and continuous enrichment of customer needs,the Internet industry has been continued to accelerate the integration of mergers and acquisitions.Since 2014,the number and amount of mergers and acquisitions in China’s Internet industry straight up.And because of the environment and characteristics of China’s Internet industry,the M&A process may have a series of risks.The analysis and prevention of M&A risks are of great significance to the rapid integration and long-term development of Internet industry.Based on the present situation of M&A in China’s Internet industry,this paper makes an overall measurement and evaluation of M&A financial risks in the Internet industry.On the premise of analysis results,this paper analyzes the possible causes of M&A financial risks and summarizes the specific preventive measures.The main methods are literature research,PEST analysis and model analysis.First of all,combined with the relevant theory,this paper reveals the Internet industry,mergers and acquisitions motivation and characteristics through PEST analysis;Secondly,this paper uses F-score model to make comparative analysis of financial risk of 40 domestic merger enterprises which had M&A in 2014 before and after the acquisition.Then this paper focuses on the analysis of the target enterprise valuation problem,the financing problem and the later integration problem and their possible causes.Finally,this paper summarizes the specific measures of preventing financial risks of M&A in the Internet industry.According to the research and demonstration of this paper,the following conclusions are drawn:(1)According to the F-score calculation and analysis,the F-value of the sample companies continued to decline from the previous year to the first year after the acquisition,which demonstrates the financial risk of the M&A enterprises is on the rise.The objective existence of the financial risks of the Internet industry is demonstrated.(2)M&A enterprises should understand the real financial situation of target enterprises,reasonably estimate the value of light assets and take some new and reasonable valuation methods to determine the value of the target enterprise.The implementation of a sound M&A strategy and the reasonable financing of mergers and acquisitions enterprises help to effectively prevent and control financing issues;M&A enterprises should not only advance the development of subsequent integration program,but also focus on core human resources,corporate culture and asset and business integration.