Financial risk identification and control of cross border merger and acquisition enterprises

Abstract

Mergers and acquisitions are basic channels for modern companies’ growth. With globalization speeding up, multinational companies increasingly take on M_A activities to strengthen global market positions and raise competitiveness. In recent years, M_A activities have played an important role in Chinese companies. Financial risk is inherent to M_A processes in cross-border companies. Also, more than 50% of Chinese companies did not achieve their M_A goals. Therefore, recognizing and controlling financial risk is essential. This paper analyses the financial risk from different perspectives and then provides suggestions by analysing a typical M_A case: Bohai Leasing merger with Seaco Company. Complete due diligence and clear M_A strategies, combination of various financing instrument, strategic paying methods and finance integration are some ways for controlling and decreasing finance risk.

Keywords

• Financial risk
• cross-border M_A
• Dupont method
• mechanisms of financial management.