Cross-border M&A Risks And Prevention Under The "Listed Company + PE" Model:A Multi-case Study

With the impact of the "anti-globalization" trend on the cross-border M&A market,China continues to promote the "going out" strategy,making China’s cross-border M&A scale gradually expand,making China the world’s second largest foreign investment country in 2021.Among them,the "Listed company + PE" M&A model has the advantages of fast financing,large amount of capital raised and less approval process,which gradually gains the favor of listed companies.Although some listed companies have achieved some results through their own practice,the actual application is not mature and is still at the exploratory stage.Therefore,the risk identification and response system in the operation of cross-border M&A based on the "Listed company + PE" model needs further improvement.After reviewing the current situation of cross-border M&A and the existing literature,this paper takes the cross-border M&A transactions of four companies,namely Xi wang Foodstuffs,mulinsen,China Tian ying and BY-HEALTH,as the research objects,and aims to analyze the cross-border M&A risks under the "Listed company + PE" model.This paper firstly analyzes and summarizes the motivation of cross-border M&A by listed companies and the process of cross-border M&A under the "Listed company + PE" model;secondly,from the specific process of cross-border M&A under this model,it summarizes the cross-border M&A risks faced by the four research subjects by combining the data indicators before and after the cross-border M&A of enterprises,and conducts a comprehensive and detailed analysis of the cross-border M&A risks under the "Listed company + PE" model from common risks and individual risks;finally,it proposes countermeasures to the M&A risks faced by enterprises in the three stages of M&A: due diligence and decision-making,M&A implementation and M&A integration.On the basis of the analysis,it is found that there are many risks under the "Listed company + PE" model for Xi wang Foodstuffs,mulinsen,China Tian ying and BY-HEALTH:the operating performance of each company is not yet optimistic after the M&A,the synergy effect is not obvious,and the overall financial risk increases to different degrees.Therefore,listed companies should strengthen their risk control when using the "Listed company + PE" model for cross-border M&A.After further research,it is found that all cross-border M&As under the "Listed company + PE" model face information asymmetry risk,goodwill impairment risk,payment risk,exchange rate risk,and legal risk;at the same time,due to the differences in the internal and external environment of each case company,each company also faces industry policy risk,refinancing risk,integration risk,debt service risk,and default risk.The paper concludes by examining the risks of each case company based on the risk analysis of each case company.Finally,based on the analysis of M&A risks in each case,this paper proposes countermeasures: in the due diligence and decision-making stages,companies should improve their attention to industry policies,reasonably assess corporate value,and improve the quality of information disclosure;in the M&A implementation stage,companies should design payment plans flexibly,pay attention to the stability of cash flow,use financial instruments to hedge risks,and pay close attention to legal and regulatory trends;in the post-merger integration stage In the post-merger integration stage,enterprises should choose an appropriate integration strategy,maintain a reasonable capital structure,and sign an agreement with the PE party to clarify the obligations of both parties.This paper analyzes and summarizes the risks and risk prevention of cross-border M&A under the "Listed company + PE" model in order to provide reference for the application of the "Listed company + PE" model,improve the efficiency and success rate of cross-border M&A,and enrich the experience of the "Listed company + PE" model.This paper aims to provide reference for the application of the "Listed company + PE" model,improve the efficiency and success rate of cross-border M&A,and enrich the research of cross-border M&A risk control under the "Listed company + PE" model.