The selection of target enterprises and the evaluation of their own capabilities is a scientific, rational, rigorous and cautious analysis process, which is the primary problem for enterprises to implement merger and acquisition decisions. If the target enterprise selection and its own ability evaluation are improper or wrong, it will bring immeasurable negative influence to the enterprise development. In the practice of M&A in China, some enterprises often ignore the hidden risks in this link, which brings troubles and difficulties to the normal development of enterprises. To sum up, the risks before the implementation of enterprise mergers and acquisitions mainly include:

1.M&A Risks caused by unclear motives

Some enterprises' M&A motivation is not based on the overall goal of enterprise development. By studying the external environment and internal conditions faced by enterprises, on the basis of analyzing the advantages and disadvantages of enterprises, according to the needs of enterprise development strategy, it is influenced by public opinion propaganda. They are only roughly aware of the possible benefits of M&A, or because they see that competitors or other enterprises have implemented M&A, they have an irrational impulse to carry out mergers and acquisitions. This impulse of blind mergers and acquisitions, which is not based on the actual situation of enterprises, lurks the risk of mergers and acquisitions failure from the beginning.

2. Blind self-confidence, exaggerating the risks arising from self-integration ability.

Some enterprises are good at mergers and acquisitions, while others are not good at mergers and acquisitions, which can be said to be based on the requirements of improving and perfecting core competitiveness, but mergers and acquisitions are also a kind of ability. Since it is a kind of ability, few enterprises are born with it. From some domestic examples, some enterprises have seen the weak position of inferior enterprises in the competition and have the motivation to buy a large number of assets at low prices, but they have not fully estimated their shortcomings, such as financial ability, technical ability, management ability, etc., when transforming such inferior enterprises, thus making the wrong merger and acquisition choice and falling into the trap of low-cost expansion.

(B) business risks in the implementation of enterprise mergers and acquisitions

The main goal of M&A is to achieve synergy, including management synergy, operation synergy and financial synergy. But from the actual situation, coordination is as rare as instigation. The author believes that the main reason for this situation is that M&A enterprises did not identify and control the risks in the M&A process ... These risks mainly include:

1, information asymmetry risk

The so-called information asymmetry risk refers to the uncertainty caused by the serious inequality between the acquirer and the shareholders and management of the target company in the process of mergers and acquisitions. Because of information asymmetry and moral hazard, it is easy for the acquired enterprise to conceal unfavorable information from the acquirer, or even fabricate favorable information to obtain more benefits. As an integrated system composed of various production factors and relationships, an enterprise is extremely complex, and it is difficult for the acquirer to fully understand and distinguish the authenticity one by one in a relatively short period of time. Some M&A activities may lack a thorough understanding of the profitability, asset quality (such as the availability of tangible assets, the authenticity of intangible assets, the validity of creditor's rights) and contingencies of the merged object in advance, and fail to find key situations such as hidden debts, litigation disputes and potential problems of assets, so they fall into the trap after implementation.

2. Financial risks of funds

There is almost huge financial support behind every M&A activity, and it is difficult for enterprises to make full use of their own funds to complete the M&A process. It is very important to form enough cash inflow in time to repay the borrowed funds and meet the capital demand of a series of integration work after merger and acquisition. Specifically, financial risks mainly come from several aspects: the uncertainty and diversity of financing methods, the high growth of financing costs, and the variability of exchange rates. Therefore, the risks brought by financing cannot be ignored.

(C) Post-merger integration process "uncoordinated" risk

One of the main motives of enterprise merger and acquisition is to maximize shareholders' wealth. In order to achieve this goal, the merged enterprises must realize cooperation in many aspects, such as operation and management. However, in the integration process after the merger, this original intention may not be realized, which may lead to the real success of the merger and there are great risks:

1, managing risk

After M&A, whether managers and management teams can be properly equipped, whether appropriate management methods can be found and adopted, whether management methods can be consistent and coordinated, and whether management level can put forward higher requirements due to enterprise development will all cause management risks.

2, economies of scale risk

After the merger, the acquirer can't take effective measures to make manpower, material resources and financial resources complementary, can't really combine all resources organically, can't realize economies of scale and supplement experience, but repeat construction at a low level. The existence of such risk factors will inevitably lead to the failure of mergers and acquisitions.

3, corporate culture risk

Corporate culture is the sum of all essential characteristics of production activities and thinking activities formed by specific groups in an environment with relatively independent space and relatively long time. Whether the two sides can realize the integration of corporate culture and form the same business philosophy, team spirit and work style is influenced by many factors and will also bring risks. Whether corporate culture is similar or not and whether it can be integrated has a profound impact on the success or failure of mergers and acquisitions, especially in transnational and cross-regional mergers and acquisitions.

4. Operational risks

In order to realize economic complementarity, large-scale operation and seek business synergy, the merged enterprises must also improve their business methods, even their production structure, increase product research and development, strictly control product quality and adjust resource allocation, otherwise there will be business risks.

In short, there are many risks in the process of enterprise merger and acquisition, which are related to the core competitiveness and execution of an enterprise. It is a complex system engineering, which involves not only capital transactions, but also many factors such as legal policy environment and social background of M&A. Therefore, enterprises should carefully analyze the potential risks in the process of M&A before M&A and make corresponding countermeasures.