Research On The Construction And Application Of Financial Risk Evaluation Index System For Overseas M&A In Power Industry

Under the context of economic globalization,China’s economy has changed with each passing day.In respond to the "going global" strategy,more and more enterprises go abroad to seek development.Cross border M & A changed into one of the effective ways for enterprises to amplify their impact and realize greater value.However,financial risk often spans the whole course of cross-border M & A,which affects the success of M& A.There is widespread concern on how to guarantee cross-border M &A activities run successfully and achieve to seek advantages and avoid disadvantages.This paper reviews the research results of domestic and foreign scholars,with the help of relevant basic theories,analyzes the current situation and main problems of cross-border M & A in China’s power industry.According to the operation characteristics of the power industry and the various links of cross-border M & A,in the current evaluation index,the corresponding first level index is selected,namely pricing risk index,financing risk index and payment risk index.Four secondary indicators are set up under each primary indicator,and three of them are improved.Then,the weight of each index is confirmed by calculation,and a financial risk evaluation index system for cross-border M & A in power industry is constructed.Next,the evaluation index system is applied to the case of State Grid acquiring the equity of Oman State Grid Company,which is aim to test the rationality and applicability of the evaluation index system.The results show that the pricing risk and financing risk are the highest,while the payment risk is relatively low.The power industry should focus on these two risks in cross-border M & A.The financial risk in the cross-border M & A cases of State Grid is generally between the general risk and the high risk,and the financial risk is mainly reflected in the pricing risk and financing risk.The expected results are basically consistent with the actual situation.Finally,this paper puts forward corresponding countermeasures for the financial risks identified in the cross-border M & A of Oman power grid by State Grid,and extends the particularity of the case to universality,the corresponding solutions are proposed for the financial risk of cross-border M & A in China’s power industry,aiming to improve the financial benefits of cross-border M & A enterprises in the power industry,as well as the sustainable development ability of enterprises.It has important reference value and significance for the power industry to prevent financial risks in cross-border M & A activities in the future.