The Analysis Of Financial Risk In Dairy Industrial Chain Merger And Acquisition

In the fierce market competition,enterprise merger and acquisition have become the accepted shortcut for organization who pursues faster development and growth,with its high performance on rapidly expanding the industrial chain,largely promoting enterprise scale and increasing firm's competitiveness.In China,under the circumstance that most dairy enterprises are small in scale,and the relatively low industrial concentration,serious food safety problems have occurred in China's dairy industry.Hence,it is an irresistible trend for dairy enterprises to expand the industrial chain,enhance the scale of enterprises and increase the degree of industry concentration through M&A.However,unlike other industries,the M&A in the dairy industry has always been a high-risk business investment due to its particularity of regions,seasons and cycles.Especially,financial risk runs through the whole process of M&A and even directly determines the success or failure of M&A.Nowadays,the corresponding prevention and control measures on the financial risk are not completely mature and perfect,since the M&A in China dairy industry has started relatively late.Therefore,for the purpose of providing meaningful reference and enlightenment for other dairy enterprises in their path of mergers and industrial chain development,this article will utilize the case of Mengniu acquired Yashili as the example to explore the financial risk and analyze the successful control steps,since it can be considered as the most influential case in the China dairy industry.Based on industry life cycle theory,information asymmetry theory and synergy effect theory,this paper first analyzes the financial risks and causes of dairy companies in China's mergers and acquisitions,and then analyzes the differences between dairy industry chain mergers and acquisitions and other industries,combined with the characteristics of dairy industry.According to the analysis of Mengniu's acquisition of Yashili case,Mengniu comprehensively analyzes the strategic risk before the merger,and the objective scientific valuation reduces the valuation risk.In the merger,the external capital is used to reduce the financing risk,and the cash match the dividend to reduce the payment risk.Multi-dimensional integration reduces integration risks and ultimately leads to successful mergers and acquisitions.Finally,it summarizes the success of Mengniu's financial risk control and puts forward feasible suggestions to provide valuable experience for the future mergers and acquisitions and industrial chain expansion of dairy companies in China.Based on the uniqueness of dairy enterprises,this paper analyzes in depth the financial risks and countermeasures implied by Mengniu acquired Yashili from the five dimensions of strategy,valuation,financing,payment and integration,which is helpful to enrich the M&A case library.