Research On Identification And Prevention Of M&A Risks Of Enterprises In The Same Industry

With the development of China’s economy,it has become difficult for companies to achieve rapid expansion purely on their own growth and competition in the industry has become increasingly fierce,so more and more companies are choosing to make mergers and acquisitions of other companies in the same industry in order to increase their market share and strengthen their competitive advantage.However,most companies have never made an M&A before and there are significant risks involved in M&A,including legal,financial,political,personnel,commercial and information asymmetry risks.If the risks in an M&A are not clearly identified and avoided,it can overwhelm both parties to the M&A.This can result in significant losses for both parties.The study of risks in the R&D sector therefore plays an important role in the current economic context.A comprehensive analysis of the risks arising from mergers and acquisitions is undertaken.A theoretical model for identifying and controlling risks in same-sector M&A is developed,and risks in the M&A process are divided into three phases: pre-M&A,M&A and post-M&A,in order to identify the risks that exist in the same cycle for the M&A target and to decide whether to implement,adjust or stop the M&A.The importance of risk control in M&A is discussed,explaining its context and relevance.The case study section of the thesis,based on a theoretical model,covers the example of the Midea-Swan M&A as a typical M&A case where both parties operate in the same industry and have essentially the same business model.The main purpose of intra-industry M&As is to increase market share and improve product competitiveness.This paper analyses the various types of risks in the pre-M&A,M&A and post-M&A cases,and summarises the relative ways and methods of risk avoidance,with a view to providing readers with insights into the identification and prevention of intra-industry M&A risks.Finally,the main conclusions of this paper are summarised.Before an M&A occurs,companies should pay sufficient attention to risk identification.Firstly,firms should assess the risk of industrial policy and strategic corporate direction as well as the risk of information asymmetry between the two parties.Secondly,companies should develop a sound M&A strategy and risk management plan,fully assess the market,financial,human,tax and legal risks of the subject company,and strengthen information disclosure and due diligence.When M&A occurs,companies should fully consider legal,financial and tax risk management measures.Enterprises should add strict compliance with industry norms and laws and regulations,fully assess the financial and tax risks of the enterprise and make good tax planning,as well as fully assess the financial risks and financial position of the target enterprise and conduct comprehensive verification of financial data.After the completion of the M&A,enterprises should pay attention to the risks of experience integration,talent integration and cultural integration.Enterprises should actively engage in experience exchange and integration to establish common values and culture that are more suitable for both parties,while doing a good job of talent integration,strengthening employee identification and training,and enhancing employees’ sense of belonging to the enterprise after the completion of the M&A.