The usual payment tools for enterprise merger and acquisition include company cash, stocks, bonds, bank loans, etc. , involving a huge amount of funds and high financing risks. If the acquirer chooses cash payment tools, it will lead to a large reduction in the company's cash flow and the company will bear enormous cash pressure. If there is a little cash flow problem, it will be disastrous for the enterprise. From the point of view of the merged company, the cash method will not be popular, because it is impossible to postpone the confirmation of capital gains and the transfer of realized capital gains, so that it is impossible to enjoy tax incentives and own the shareholders' rights and interests of the new company, which will affect the success of the merger and bring related risks.

Second, operational risk.

Operational risk refers to the fact that after the merger is completed, the acquirer cannot make the whole enterprise group produce operational synergy, financial synergy and market share effect, and realize economies of scale and complementary sharing of experience, and even the whole enterprise group is dragged down by the performance of the merged new company.

Third, information risk.

The premise of M&A is to have a good understanding of the target company and the information of both parties is completely symmetrical. But this is just an ideal state. In actual mergers and acquisitions, there are many cases of failure due to reckless actions.

Fourth, the risk of anti-takeover

Under normal circumstances, the acquired company is unpopular and uncooperative, and the anti-takeover measures they use that are lethal to the acquirer have various "poison pills". These anti-takeover behaviors undoubtedly bring considerable risks to the acquirer.

Verb (abbreviation for verb) institutional risk

System risks are mainly reflected in: 1, M&A is short of talents, and the scale and quality of M&A are seriously restricted. 2. The government takes all-encompassing measures for enterprise mergers and acquisitions by administrative means, which brings certain risks to enterprises. 3. The personnel placement of the merged enterprise consumes capital due to the requirements of the system and policies, which often brings a heavy burden to the acquirer.

Legal risks of intransitive verbs

For example, in China's current acquisition rules, the acquirer is required to announce and suspend trading after holding 5% of the shares of a listed company (for non-sponsors of the listed company), and then repeat this process every 2% increase (announcement 14 times), and then is required to issue a comprehensive acquisition offer after holding 30% of the shares. This procedure leads to high procurement cost, high procurement risk and complicated procurement, making procurement almost impossible.

{China Renmin University Group Management Course Arrangement}