Research On The Financial Risk Of Geely’s Acquisition Of Daimler

Since the 1990 s,corporate mergers and acquisitions have become increasingly active as the world economy has grown steadily due to technological advances and industrial revolutions.Meanwhile,Chinese economic market is improving constantly,and the strength and competitiveness of enterprises are also constantly strengthening.More and more enterprises are opening wider to the outside world and going international.In the cross-border M&A industry,due to the development of domestic science and technology and the growth of market demand,the automobile industry is becoming more and more important.However,through Deloitte’s analysis of relevant cases,it can be seen that only a few Chinese enterprises can successfully complete cross-border M&A transactions at present.Among them,quite a number of enterprises have not only failed to achieve the expected strategic objectives after completing the merger and acquisition,but also generated more financial risks,which may even lead to financial crisis to a certain extent.Therefore,the identification and analysis of financial risks arising from these M&A transactions has become a key issue in China’s cross-border M&A transactions.The paper takes Geely Group’s cross-border M&A of Daimler,which is the largest and representative M&A transaction in the automotive industry in recent years,as a specific case,and focuses on the analysis of the financial risks and risk control issues arising from cross-border M&A.Firstly,based on the relevant theories of financial risks in cross-border M&A,this paper makes a reasonable analysis of various common financial risks and their risk control mechanisms in cross-border M&A.Secondly,aiming at the current situation and motivation of the bilateral M&A transaction between Geely Group and Daimler Company,the pricing,financing,payment and integration risks of Geely Group in this transaction are studied and analyzed.Next,the control measures implemented by Geely Group for various possible risk are analyzed,and these control measures are evaluated and summarized;Finally,it is concluded that at present,Geely Group’s cross-border M&A transactions are relatively successful to a certain extent.Geely has controlled the financial risks to a certain extent by making reasonable strategic plan and cooperating with a number of banks,which has enabled enterprise to obtain new energy technology support and high-quality and stable foreign markets.It has also initially achieved strategic coordination and improved its international position and competitiveness in the international market.However,the huge debt financing and insufficient liquidity brought by frequent mergers and acquisitions will also bring new challenges to Geely Group.According to the conclusion of the above case analysis,the author puts forward several inspirations and summaries for cross-border M&A transactions of Chinese automobile enterprises: the capital operation mode should be improved gradually,unified and strict internal control need to be implemented on capital management;according to its own strategic development plan,suitable target companies should be selected for M&A transactions;after the completion of M&A,the integration will be the key issue of the next operation strategy,and the synergy brought about by M&A will be effectively brought into play for common development.