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Financial risk and control of enterprise merger and acquisition

Author: LiuZongSheng From: www.yourpaper.net Posted: 2010-06-03 10:30:50 Read:
The acquisition of [Keywords] financial motivation finance risk control
[Abstract] M & A is a high-risk business activities, always risk throughout the M & A activity, the financial risk is an important factor affecting the success or failure of the merger.Through systematic analysis of value evaluation, financing activities in the enterprise merger and acquisition and integration of the financial risk, shows that M & A is a high risk of property transactions (among which financial risks are the most prominent).Therefore, to use the ex-ante and ex-post control of financial risk, financial risk control to reduce the application of afterwards, so as to improve the survival rate of enterprise merger and acquisition.
The financial risk of M & A,
The financial risk of the enterprise merger, refers to a certain period of time, for the merger and acquisition financing or debt due to merger, the possibility and the enterprise financial crisis.From the risk results, it generalizes the core part of enterprise financial risk of M & A, namely "caused by the debt financing decision".But from the sources of risk, the financing decision not only cause leading to financial risk, because in the enterprise merger and acquisition activity, decision-making related to financial results include pricing and payment decision.
First of all, the enterprise merger and acquisition is a kind of investment behavior, and then is a kind of financing, investment and financing decisions affect the financial situation of enterprises after merger and acquisition.Secondly, the enterprise merger and acquisition is a kind of special investment behavior, from planning and design to the completion of the transaction, the various value factors and can not be reflected immediately in the short-term financial index, and must go through a period of integration and operation, in order to achieve the goal of value.Again, lower value target of M & A is not only to ensure that no debt risk, but to get a far more than the value of the debt category expected goal, realize the value.
Therefore, if we only use the financing risk as a measure of financial risk standard, in a certain sense, reduces the value of M & A of motivation.From the perspective of corporate finance, the financial risk of the enterprise merger should also include "and the deterioration of the financial situation of enterprises and financial achievement losses caused the financial activities involving the uncertainty due to mergers and acquisitions".The financial risk of M & A should refer to the enterprise financial deterioration or financial results loss caused by merger and acquisition pricing, financing, payment and other financial decision-making uncertainty, the expected value and the value realization of M & a serious negative deviation caused by the financial difficulties of enterprises and financial crisis.
two, the financial risk of M & a definition and origin analysis
A complete merger and acquisition activity usually includes the choice of the target enterprise, the target enterprise value evaluation, feasibility analysis, M & M & A financing, bid method and the integration after merger.These links are possible risks.The financial risk of M & a process from the following aspects:
(a) the merger of the evaluation of target enterprise financial risk.
Based on M & A is to assess the value of target enterprise, namely through the acquisition target (equity or assets) for the judgment of value, provide the basis and basis for the merger and acquisition both for a supply of sth..The value assessment of target enterprise in China is the basic principle and method of estimation procedure follows the assets assessment to make, its rationality is affected by many factors.
1 evaluation index system is not perfect.The merger and acquisition of Chinese enterprises lack of a series of effective evaluation index system, the relevant provisions in principle, operability is not strong.Mergers and acquisitions in the process of subjective influence on merger, to not according to market law of value, will inevitably lead to "the loss of state-owned assets", or to avoid the loss of state-owned assets and the overestimation caused the value of target enterprise merger not.
Intermediary 2 lack of service in M & A.Due to the lack of independent to provide accurate information and advisory services for mergers and acquisitions intermediary organization, so can not reduce the acquisition of both the information cost, also can't provide guidance and supervision of the M & A behavior, increased M & a transaction cost and risk.
The government 3 mergers and acquisitions intervention too much.Some local governments "forced marriage", or even to unreasonable transaction prices forced the enterprises into the advantages of enterprises will eventually enterprises drag phenomenon.The intervention of the government not only makes the transaction price deviation from the value of M & A, also caused huge business burden.
(two) brings M & A financing activities of the financial risk.
1 different ways of financing effect.M & A financing usually including internal financing and external financing.Internal financing enterprises can free, the funding pressures small, and no pay, no financing cost, can reduce the financial risk.But only rely on internal financing, it will produce new financial risks.On the one hand, because of China's enterprises are generally small scale, low level of profitability, rely on their own accumulated very difficult according to plan quickly raised enough funds needed; on the other hand, if a large number of the internal financing, enterprise valuable liquidity, will reduce the enterprise to external environment change fast reflection and adjustment ability, once the enterprises own funds for the acquisition, to financing difficulties, will endanger the normal operation of enterprises, increase the financial risk.External financing includes equity financing and debt financing.Equity financing has its limitations: first, our country stock financing requirements more stringent, the long time asked, is not conducive to seize the merger and acquisition opportunities.Secondly, the stock financing will inevitably change the ownership structure of enterprises, dilution of large shareholder control right of enterprise, and may even the acquirer shareholders holding the right risk loss.Debt financing than equity financing, the cost is lower, but in our country, one is the enterprise debt rate is high, then the borrowing capacity is limited, or even go into debt, after the merger of enterprises because of too much debt, capital structure deterioration, in the competition at a disadvantage.Two is the debt due to debt service, financial burden is heavy, if improper arrangement, enterprises will fall into the financial crisis.
Whether the 2 financing ways to adapt with the motive of mergers and acquisitions.Here the "motivation" instrument refers to mergers and acquisitions to temporarily hold or long-term holders of the target enterprise.If the enterprise merger is to hold for the time being, to stay after the appropriate transformation to sell, to earn the difference, this requires a considerable amount of short-term funds to achieve the objective of.This can be short-term borrowing way choice capital is relatively low cost, but the debt service burden is heavy, if the enterprise which is arranged properly, will fall into the financial crisis.If in order to long-term holders of Target Corp, according to the Japan needs the capital structure of the enterprise and its continuous operation, to determine the specific ways to raise funds.Therefore, enterprises should be aimed at the target enterprise debt repayment period, maintain the normal working capital, so that the payback period of investment and loan types are matched, reasonable arrangement of capital structure.
(three) the financial risk of M & a integration.
M & A activity in the enterprise, because the merger enterprise and target enterprise management concept, organizational structure, management system and financial operation mode, in the process of integration inevitably there will be friction, if not properly handled will not only offset brought about by the acquisition of interests or even erosion the original enterprise's competitive advantage.Especially in the purchase of lack of experience and both the case of asymmetric information, the seller can be very important. Intentionally or unintentionally conceal some information on the buyer, and the buyer without the full insight into the ability, can taste the "bitter fruit in the integration after M & a in".
(four) other sources of financial risk.
The existence of system risk, inherent risk and operational risk in mergers and acquisitions.Develop system is designed to reduce and decisions related to the uncertainty of the expected to reduce the risk of.However, because the system is relatively stable, long effect period, once the system formulation and objective laws against will have a greater impact on the risk.By the system and the financial risk is called the system of financial risk.
The two aspects of enterprise inherent financial risk from the inherent limitation of financial management and financial management on the basis of information limitation.Financial management as a discipline of economics and management, it is not mature, some important financial theory is based on some assumptions, these assumptions and reality there is a certain gap, is an assessment of the objective economic environment of uncertainty, it can be said that these theories itself is faced with certain risk.At the same time, the main source of information for accounting information in financial management on the basis of also not be the pink of perfection, some assumptions on the same is not always to be established.
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