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

• Main Authors: Adelina DUMITRESCU – PECULEA, Yuanyuan SUI
• Format: Article
• Language: English
• Published: Chamber of Financial Auditors of Romania 2016-12-01
• Series: Audit Financiar
• Subjects: Financial risk; cross-border M_A; Dupont method; mechanisms of financial management.
• Online Access: http://revista.cafr.ro/temp/Article_9519.pdf

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.