Research On Financial Risk Control Of Gold Stone Asia Pharm In Cross Border M&A

With the continuous improvement of the domestic M & A market,more and more companies enhance their core competitiveness by M & A to expand their scales.But cross-border M & A,as an investment behavior,have a higher risk than horizontal and vertical M & A.However,failed M & A not only cannot achieve the diversified development,but will also drag down the performance of the original enterprise and cause it to financial crisis.Therefore,it has high practical and theoretical value to research the control of financial risks in cross-border M & A.This paper starts with the background of M & A,following with the overview of parties involving in a case of M & A,and analyzes the reasons for M & A.Afterwards,use qualitative methods,financial statement analysis,and Z-value model analysis to analyze the financial risk of Gold stone Asia pharm cross-border M & A with analyzing risk control measures the company using,and finally summarize the recommendations and inspirations.This article firstly reviews the current status of M & A risk researching in China and abroad.Defining the concept of cross-border M & A and M & A financial risk and make a clear classification in order to introduce identification and control measures of M & A risk.The following part is case introduction by showing the background and situation of the M&A case and the both parties.then introduces the process of case mergers and acquisitions,and finally analyzes the motivations of cross-border mergers and acquisitions: promoting diversification strategies,exerting synergies between mergers and acquisitions,and improving the core competitiveness of enterprises.And motivations of cross-border M & A,like promoting diversified strategies,exerting synergies or improving the core competitiveness of enterprises,is shown after describe the process of the case.The following part analyzes the risk of Gold stone Asia pharm M & A by using qualitative method,financial statement analysis,and Z-value model analysis method.The conclusion draws that financial risks in this M & A case are mainly reflected in the valuation pricing risk before M & A,financing risk and Payment risk,Financial integration risks after M &A and risk of impairment of goodwill,after analyzing the financial risks of this case from M & A preparation stage,implementation stage,and integration stage.Afterwards,analyze the measure that Gold stone Asia pharm use,like control the selection risk of the target by selecting the industry that compensates for itself and the target company with a small operating risk,control valuation pricing risk by fully valuing due diligence and valuation of the target company,control financing risks in a timely manner by raising consideration funds to targeted additional issuance and making guarantee payment to borrowers from shareholders,control the payment risk by adopting a combination of equity and cash payment methods and issuing additional shares to the original controlling shareholder acting in concert,control financial integration risks through a unified financial system and organizational structure,as well as maintaining the original management structure and management team,control goodwill impairment risk by setting reasonable performance targets and signing performance commitment compensation agreements.Finally the paper draw a suggestions and enlightenments form this case.The recommendations to the parties of M & A is firstly,the target company should be investigated in many ways.The second is to evaluate the enterprise value through a combination of multiple methods.The third is to avoid over-reliance on equity financing and equity payment in the financing payment process.Fourth,strengthen the management of target companies after mergers and acquisitions.Finally,formulate a reasonable performance compensation plan is needed.For cross-border mergers and acquisitions of other companies,some enlightenments form this case study that can give them is to rationally formulate multiple strategies at first.The second is to investigate the target company in detail.Third,expand financing methods,before flexibly chose a payment method.Fifth,make a reasonable business plan and establish a new financial management system specification latter.