Research On Financial Risks And Prevention And Control Strategies Of Enterprises Based On High Premium M&A

With the progress and development of business,the market environment has posed more challenges to enterprises,making more enterprises want to achieve their strategic transformation and rapid development through mergers and acquisitions.However,many enterprises rely on the momentum of rapid development of information technology to achieve transformation to Internet platforms through acquisition.However,in the current market,with the rapid growth in the number of mergers and acquisitions(M&As),the operational risks caused by high-priced mergers and acquisitions(M&As)have gradually emerged,attracting high attention.In high premium mergers and acquisitions,a company’s operating performance decreases due to the provision of a high amount of goodwill impairment,which affects the company’s operations and also causes losses to investors;The acquirer’s financial burden caused by paying excessive consideration can also affect the acquirer’s operating performance due to the acquiree’s failure to fulfill its performance commitments.Enterprises achieve business transformation and enhance their strength through mergers and acquisitions.However,in this high premium merger and acquisition process,whether the enterprise can effectively control the possible financial risks is a question worthy of further in-depth study and discussion.This article analyzes the three stages of traditional manufacturing enterprises’ transformation into the Internet marketing service industry: pre merger,during merger,and post merger.It can be found that the high premium financial risks in this case mainly include the following four points:(1)The risks caused by the unreasonable valuation of the merged company W;(2)Financing risks and payment risks arising from the implementation of high premium mergers and acquisitions;(3)After the merger and acquisition,Company W experienced substandard performance and goodwill impairment,resulting in operational risks for Company J Technology;(4)The integration effect of both parties after the merger and acquisition is not as expected,resulting in integration risks.In conclusion,based on the actual situation of the case,suggestions are made accordingly.Enterprises should select appropriate target companies based on their own development strategies,prevent managers from overestimating the value of the target company due to information asymmetry and overconfidence,choose diversified financing methods and payment methods to spread risks,rationally set performance commitment agreements,and do a good job of integration after mergers and acquisitions in various aspects.