Research On The Prevention And Control Of Financial Risks In The M&A Of Internet Game Enterprises

Recently,the game market is expanding in China.Even all over the world,E-sports has been gradually involved in international competitions,and the game field is developing steadily.The game market has a good growth prospect,especially with the growing 5G technic,It will not only bring the game experience of ultra-low delay and fast download speed to the game consumers but also boost the outbreak of China’s game market.To rapidly expand the global game market share and enhance competitiveness,Chinese game companies often choose mergers and acquisitions,so the Internet game sector is active in the market.However,not all of internet companies enable to get a positive mergers and acquisition effect.Due to the lack of effective prevention and control of financial risks in the process of M&A,the effect of M&A is greatly reduced,and the synergy and scale effect of M&A can not be realized.Even there are not a few companies with huge losses.Therefore,the financial risks faced by the merger and acquisition of Internet game enterprises can not be underestimated.It is particularly important to identify the financial risks and effective prevention and control measures for the successful merger and acquisition of Internet game enterprises.In this dissertation,the case,Century Huatong’s acquisition of Shengyue Network,is taken as an example,Century Huatong is the third largest game company in China.In the case study,the M&A background will be considered.This paper analyzes the possible financial risks in the three stages before,during,and after M&A activities.Analyze the financial risk control strategy adopted by Shengyue Networks in M&A activities,and discuss the financial risks faced by online game companies in M&A activities and effective risk prevention and control measures.This paper believes that the reason for the success of Century Huatong’s merger and acquisition of Shengyue Network lies in the effective prevention and control of the financial risks in the merger and acquisition,the use of professional institutions to carry out due diligence and full investigation of Shengyue Network,the realization of the scientific valuation of Shengyue Network,and the adoption of the financing method of non-public stock raising and the mixture of issuing shares and paying cash according to the actual situation Payment method reduces the financing and payment risks.After the completion of the merger,Shengyue Network will integrate with the original game ecosystems such as Wuxiqiku and Diandian Interactive East to realize the financial risk prevention and control of Shengyue Network’s merger and acquisition.This article proposes that online game companies should pay attention to the prevention and control of financial risks in the process of mergers and acquisitions,and realize the prevention and control of pre-merger financial risks caused by information asymmetry by accurately formulating strategies,reasonable valuations,and pricing.Through the accurate formulation of strategies,reasonable valuation,and pricing to achieve the prevention and control of financial risks before M&A due to information asymmetry,through the optimization of financing structure,flexible choice of payment methods to control financing risks and payment risks.Especially for cross-border mergers and acquisitions of Internet game companies,we should also pay attention to the prevention and control of exchange rate risk.