The Financial Risk Of A "Snake Swallow An Elephant" Merger

With the continuous improvement of the world economy and the vigorous development of society,the competition among enterprises is increasingly fierce.Some enterprises are faced with low market share,low added value of products,lack of technology research and development and capital,and other problems.In the future,such enterprises will be forced to withdraw from the market or face industry reshuffle and integration.In this case,the cooperation between enterprises began to gradually become a trend,mergers and acquisitions as a common means in the capital market is also increasingly active in China.Especially after the State Council issued the "State Council Opinions on Promoting Enterprise Mergers and Reorganizations",Chinese enterprises have adopted mergers and acquisitions to rapidly enhance their competitiveness,in order to improve the internal management of the company and promote technological progress,optimize the industrial organization structure,and achieve sustainable development.In China’s emerging merger and acquisition wave,a certain amount of relatively special "snake swallowed elephant" mergers and acquisitions have appeared.Compared with general mergers and acquisitions,such mergers and acquisitions involve a large difference in the volume of the two parties,which requires the acquirer to have sufficient financial support,relying on share issuance and leverage to meet the needs of funds.This kind of mergers and acquisitions not only brings opportunities to smaller enterprises,but also shows different financial risks from general mergers and acquisitions.Therefore,it is necessary to have a clear and profound understanding of the process of "snake swallowing elephant" mergers and acquisitions and the accompanying financial risks in order to improve the success rate of such mergers and acquisitions and provide more development opportunities for small enterprises.Based on this,to minimize financial risks brought by the mergers and acquisitions,collect the m&a risk literature at home and abroad,this paper summarizes the main points and theory,to Oushennuo imperial ware m&a this project as an example to conduct risk identification and analysis,respectively,the imperial ware and operating conditions and market background of Oushennuo,and understand that Oushennuo imperial ware m&a project execution.In combination with the basic features of snake swallow like mergers and acquisitions mode,relying on the corresponding financial data contrast,respectively from the valuation,financing and payment three aspects to identify and analyze the m&a financial risk of the project,on the basis of in-depth interpretation of mergers and acquisitions of financial risk,for which found the risk points,combined with the m&a risk analysis results of the project,were put forward to optimize financing structure,rich means of payment,such as risk aversion strategies,in order to achieve the "snake swallow like" mergers and acquisitions to effectively control the financial risk.It provides reference and reference for the future merger and acquisition of the sanitary ware industry in China,and helps to improve the benefit of the "snake swallowing elephant" merger and acquisition in China.