Risk Analysis Of Overseas M&A Financing Of Chinese Enterprises

With the implementation of China’s "Going Out" and "One Road,One Belt" strategies,China’s economy is gradually transforming towards a high-quality direction.The number of overseas mergers and acquisitions by Chinese companies has increased year by year and reached its peak in 2016.China’s economy is in a critical period of transformation,and industrial integration is progressing rapidly.In order to expand the scale of enterprises,optimize the allocation of resources,and achieve strategic transformation,Chinese enterprises have begun to shift their goals to foreign highquality enterprises.Overseas mergers and acquisitions have become a way for corporate development.As a high-risk capital operation,overseas mergers and acquisitions have a large volume of underlying transactions,and it is difficult for enterprises to meet the capital requirements of mergers and acquisitions through their own funds.The issue of financing has become a key factor in the success of corporate mergers and acquisitions.Enterprises should pay attention to the impact of financing risks on mergers and acquisitions during the financing process.The problem studied in this article is the identification and analysis of financing risks of Chinese private enterprises in various stages of overseas mergers and acquisitions,and evaluation of the effectiveness of financial risk control measures in the process of overseas mergers and acquisitions.Against this background,under the guidance of related theories,this article uses a combination of theory and case studies to explore the identification,evaluation,and control of financing risks in China’s overseas mergers and acquisitions.In terms of theory,based on the research of domestic and foreign literature,this article defines mergers and acquisitions and overseas mergers and acquisitions,risks and financing risks,and sorts out the influencing factors and divisions of financing risks.In view of this,this article uses Xiwang Foods’ acquisition of Kerr in Canada as a case study.First,it summarizes the basic situation of Xiwang Foods,the motivation of mergers and acquisitions,the history of mergers and acquisitions,and the specific financing strategy of Xiwang Foods.Second,it analyzes the identification of financing risks of Xiwang Foods at different stages of overseas mergers and acquisitions,and introduces the Fscore model to financing risks Quantitative evaluation and analysis were performed.Finally,the effectiveness of financing risk control at different stages of Xiwang Food’s overseas mergers and acquisitions was analyzed.This article includes the following six parts: The first part is the introduction of this article,which introduces the background and significance of the case study,a literature review on the factors affecting the risk of overseas M & A financing,identification,evaluation,and control,research ideas and methods,and the basic framework of the paper;The second part is a theoretical overview of overseas M & A financing risks,which introduces the relevant definitions of overseas M & A financing risks,the types and characteristics of overseas M & A financing risks,and influencing factors.It also introduces relevant theoretical foundations to provide support for subsequent case analysis.Part is the case overview of West King Food’s merger with Kerr.It describes the general situation of the case from the perspective of the parties to the merger,the motivations of the merger,the merger process,and the financing arrangements for the merger.The fourth part is the identification and evaluation of financing risks in the West King Food merger with Kerr.Based on the identification of financing risks before,during,and after the merger,the inductive F-score model is used to quantify the financing risks in the merger.The fifth part is the control analysis of Kerr’s merger of Xiwang Foods.Analysis of control activities before,during and after M & A The sixth part is the conclusion and enlightenment of the case.Through this article,it is found that Xiwang Food has fully utilized the important role of various intermediaries in the identification of financing risks in the early stage of overseas mergers and acquisitions.It reasonably used overseas funds in the financing process to minimize financing costs;and,Xiwang Food PE institutions have also been introduced to effectively diversify the financing risks in mergers and acquisitions,reduce financing pressure in a short period of time,and adopt reasonable financing strategies to complete leveraged mergers and acquisitions.According to the research in this paper,it is found that Xiwang Foods’ overseas mergers and acquisitions are timely and the financing strategy is bright.The nondirectional issuance and replacement of debt effectively improves the capital structure of the company;the "listed company + PE" merger and acquisition model effectively relieves the financing pressure and increases the enterprise The success rate in overseas mergers and acquisitions;the financing strategy of “introducing private equity + shareholder loans + credit loans + own funds + Earn-out” can provide some reference for other companies’ overseas mergers and acquisitions.However,after the merger,the debt repayment pressure and the stability of cash flow caused by the leveraged buyout of the company also need to pay attention to the company.In order to reasonably avoid the financing risks of overseas mergers and acquisitions of enterprises,this article proposes that: the state should improve the legal system related to overseas financing of enterprises,and enrich the financing channels for overseas mergers and acquisitions of listed companies in China;Adopt applicable financial early warning models to standardize risk management measures.All in all,the problems encountered by different companies in overseas mergers and acquisitions and the financing strategies adopted are different.However,in overseas mergers and acquisitions,there are certain similarities in the form of financing risk and the identification of financing risk.Based on this,this article expects to provide some reference for the analysis of overseas M&A financing risks of similar cases in the same industry.