Research On Financial Risk Control Of Huadong Huavy Machinery's Acquisition Of Runxing Technology

With the continuous development of the economy,the competition among enterprises is becoming increasingly fierce.In order to seek survival and development,many enterprises regard M&A as an important way to develop rapidly and become bigger and stronger.Under the background of technological innovation gradually leading the market,the development of traditional heavy industry has been hindered.In order to expand the market,increase market share,and better adapt to the situation of technological innovation,some traditional heavy industries choose cross-industry transformation and mergers and acquisitions to promote enterprise development.As a typical case of heavy industry cross-industry transformation and acquisition,the traditional heavy industry enterprise Huadong Heavy Machinery has achieved the goal of transforming high-tech industry by acquiring the new three-board enterprise Runxing Technology and opening up the market with its high-end technology.Although there are great advantages in cross-industry mergers and acquisitions,the M&A parties have great differences in terms of industry nature,business strategy and financial organization structure.This makes cross-industry transformation and mergers have great financial risks.Once the control is not timely,it may cause the merger to fail,causing huge losses to the enterprise.Especially when the acquired party comes from the New Third Board market,the financial risk of M&A will be even worse.Because the market position of the New Third Board enterprises is not stable,the financing ability is not good,the anti-risk ability is lacking,and the financial supervision system is not perfect.The Huadong Heavy Machinery acquisition and acquisition of Runxing Technology,which is selected in this paper,belongs to the cross-industry transformation and acquisition,and the acquired party comes from the New Third Board market.Therefore,it is of great theoretical and practical significance to carry out research on this M&A case.Firstly,based on the relevant theories of cross-industry M&A and financial risk and control,this paper makes a detailed and comprehensive analysis of the financial characteristics of both parties from the perspective of assets,capital and business.The study found that the proportion of fixed assets of the mergers and acquisitions in this case is relatively high,and it is difficult to transform through its own;the target enterprises are short of funds,but the business status is good,which provides a certain possibility for the success of mergers and acquisitions.Then,this paper examines and studies the whole process of M&A,and finds that the M&A risk in the case is mainly reflected in the value assessment risk before the merger,the financing and payment risk in the merger,and the financial integration risk after the merger.Then,through in-depth analysis of the case,the rationalization of valuation before mergers and acquisitions,diversified financing and payment in mergers and acquisitions,and financial integration after mergers and acquisitions have played a good role in controlling the financial risks of the M&A process.Finally,based on the financial data of the acquisition of East China Heavy Machinery for the past five years,this paper uses the Z model to test the effect of risk control,and finds that the risk control effect of the merger party is good,which is a successful case.The case study concludes that the success of M&A depends on the wise choice of Huadong Heavy Machinery's target companies,careful selection of evaluation methods,emphasis on future earnings,and better control of financial risks in the M&A process,which can be similar to cross-industries in the future.The case of transformational M&A risk control provides reference.The innovations of this paper are reflected in the following aspects:First,from the research perspective,this paper focuses on the research of financial risk control of cross-industry transformation M&A,especially when the merger is a traditional heavy industry,and the acquired party is a new three-board market enterprise.This kind of merger case is widely accepted in the theoretical and practical circles.attention.Second,the research content of the risk control research system is relatively sound.This paper first analyzes the financial characteristics of M&A from the perspective of assets,capital and business.Secondly,it conducts a comprehensive study on the whole process of M&A risk control.Finally,the Z model is used to test the financial control effect of M&A.From a risk identification,risk control to a wind control effect test,a more complete risk control system is established.The research in this paper is insufficient.First,due to various reasons,the non-public data indicators in this case are difficult to obtain,which makes the research process of this paper have certain deficiencies.Second,from the scope of data selection,the annual data of 2019 has not yet been obtained.Published,2019 data is incomplete,so there is a lack of financial analysis in 2019,which is the need for further research in this article.