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On our country state-owned enterprise merger risk and its prevention

Author: YangYuanXia HuXiaoHong From: www.yourpaper.net Posted: 2010-05-30 17:41:08 Read:
Keywords: the risk prevention and control of enterprise M & A
Abstract: this paper analyzes the main risks and causes of China state-owned enterprise merger and acquisition, and puts forward the prevention and control measures.
The risk of M & A, is refers to the enterprise in the process of M & A activities in the enterprises, the possibility of loss.In general the randomness, relative characteristics.
The main risk and its causes of 1 current state-owned enterprises mergers and acquisitions in China and analysis of
From the merger of enterprise risk whether can control perspective, the merger and acquisition of state-owned enterprises in our country risk, can be divided into system risk and non-system risk two.
1.1 the system risk
The system risk is due to macroeconomic environment or external factors, on M & A events incapable of action, or to take measures can only be part of the change, not change the outcome of events from the essence, also known as uncontrollable risk.From the analysis of the actual situation of the M & A, the following system risk exists merger and acquisition of state-owned enterprises in china.
1.1.1 by the enterprise property risks
The first is difficult to figure out who are eligible for negotiators.Due to the nature of state-owned enterprises and the special principal-agent relationship, enterprise managers, departments of the responsible person, and even from the local government to the central government's top leadership is nothing but the state-owned property agent.Government management of the state-owned enterprises, and is often carried out by different departments.Many want to joint venture or acquisition potential partners often did not know who to turn to negotiate, or can not find the owner, or have too many "owner".Even if the talks, may also be due to the different government departments disagree but failed.
The second is the possible owners of the agent to sell.Because of China's specific situation, the state-owned enterprise's property right transaction is an important problem, is likely to sell the owner's agent.Because in any one transaction of state-owned property rights, the owner may not play, only by acting top led the negotiations the officials of the competent authorities or enterprises.In this way, the state-owned enterprise agent might secretly taking bribes, depressing its property prices, the so-called "the loss of state-owned assets".
1.1.2 target enterprise personnel placement risk
State-owned enterprises have a special relation of debt, it is the workers on duty.In the traditional planned economy, the government through the state-owned enterprise workers have an implicit promise, to ensure that the employment of workers.When the enterprise property changed hands, the new owner may not continue to undertake such obligations, in accordance with the rules of the market economy, to ensure a secure job. Workers also is not a good choice.However, in the process of transaction of property right in state-owned enterprise workers, of the original commitment to obtain an appropriate treatment, this is bound to be reflected in the property rights trading negotiations, so negotiations more difficult.The solution or by the sale of enterprises to placement, the cost for enterprises with high selling price, or by the merger of all or most of their compensation is received, the lower enterprise selling price.In reality, the latter is quite common, namely the enterprise responsible for solving all or most of the enterprise, including the problems from the welfare, social security retirement.Although this way may avoid social unrest in a certain period of time, but also for the good operation of enterprises and the healthy development of the hidden trouble.Some enterprises will find that after over by merger and acquisition of enterprises, continue to bear the original by the government commitment is a very heavy burden.
1.1.3 legal risk
Legal risk is refers to the enterprise merger and acquisition activity itself or business activities and legal after M & a conflict arising from the risk.Western countries in order to promote and maintain fair competition, often through legislation to regulate the M & A activities, such as the development of the Merger Law, company law, securities law, antitrust law and a series of laws.At the same time, rules of governments have made laws, regulations on M & A activities.Enterprises in the design of M & A activity plan, once the relevant legal policy understanding insufficiency which contain violations of law in action, it will make the acquisition plan can not be achieved.
1.1.4 political risk
Political risk is that the goal of the enterprise in the country's political environment to the M & a risks.Obviously, the target enterprises of the national political situation is stable, communication and contact with the outside world, the more, the higher degree of social stability, the degree of government regulation on the economic system is low, then the political risk of M & A is smaller, for M & A enterprises may bring less damage, instead, the greater.
1.2 non system risk
Unsystematic risk refers to the merger and acquisition of enterprises through the prevention and control measures of its own, can adjust the occurrence probability, reduce the occurrence of the risk of loss, also known as the controllable risk.From the analysis of the actual situation of the mergers and acquisitions, mergers and acquisitions of state-owned enterprises in China mainly has the following several non - system risk.
1.2.1 information risk
In a takeover battle, the information is very important.True and timely information can greatly improve the success rate of M & a action.But the actual merger because of hasty action and the failure of the case many, this is the economics of the "information asymmetry" risk.In China, the information obtained is very complex and difficult, even make every attempt got the information, may also exist astonishing blunder.The seller does not tell the truth in the acquisition of the former is constant some thing.Other key information errors such as transaction subject ineligible transactions of property rights, the object is not clear (not clear to buy assets and debt, the debt situation, some financial statements is not sure), such as illegal trading program.
1.2.2 integration risk
The content and the scope of M & A integration is wider, reconfiguration and integration of existing assets, debt, and the organizational structure of the enterprise personnel adjustment, relocation of existing enterprise strategy, and corporate culture integration, the integration of risk comes from the integration of work.According to a statistics, failure in the global scope of the case, more than 80% direct or indirect causes for enterprise integration after M & a failure.
1.2.3 financial risk
State-owned enterprise generally has the investment impulse, scale expansion and rapid.Compared with 50% of assets and liabilities rate of general enterprises on the international level, the assets and liabilities of state-owned enterprise level is significantly higher rate in China. While the merger requires huge capital support.Because of its own funds, can not meet the M & a funding needs, but to expand the size of loans, short-term loans for investment, short and lend long cast serious phenomenon.Because the recovery period of investment is long, the effect is slow, the enterprise had to take borrow new also old way of keeping the size of the loan, some will continue to increase loans to support, investment demand.This will inevitably cause the corporate cash flow difficulties, owing on the loan and loan size does not match.Once the M & a failure, the enterprise unable to repay bank loans, the final will be bankruptcy liquidation.
The 1.2.4 operational risk
Operational risk is the risk of enterprise merger and acquisition is completed, resulting in changes in the market for enterprise risk.Changes of M & a risk and market size, competitive strength, the target enterprise's competitive position, product demand, and the fluctuation of the market price, supply investment products related to.If the product sales market prospects or too much uncertainty, fluctuate and investment products supply market, will bring a great risk to the enterprise merger and acquisition.
1.2.5 strategic risk
In the process of restructuring state-owned enterprises, some enterprises because of its location is not clear, strategic direction is unknown, often can't resist the temptation of market opportunities, tend to buy from the industry far enterprise, gradually away from their familiar field, causing industry dispersion, control fatigue, risk has been constantly enlarged.This deviation from the enterprise development strategy of expansion preferences and investment behavior easily lead to synergistic effect is poor, not the size of the economy, will give the enterprise the development to bring great risk.
In fact, from the traditional enterprise M & A has no strategic phenomenon is relatively common, these enterprises have formed a stable enterprise scale and capital accumulation, under the high growth in emerging industries temptation, no longer love on the main business, blind to enter the field of high technology, high technology enterprise engaged in mergers and acquisitions, "the so-called stable yard, x4~'l- liven", although the development of desire is good, but the development train of thought is beyond their own strength and management ability, and eventually most of them can only be ended in failure, such cases are not uncommon.
In addition, there is risk evaluation etc..At present our country's listing Corporation non-tradable shares and equity of the non-listed company is lack of circulation mechanism and smooth, no legal market, which makes the price formation of the fairness, rationality and legitimacy problem.Listing Corporation of state-owned shares can not be listed in circulation, in the present enterprise evaluation mechanism is not perfect, the illegal operation of the space is very large, thus affecting its value evaluation.
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