What are the financial risks of M&A?

Legal analysis: M&A is related to the development of two enterprises, especially the financial risks in merger and acquisition. If a company has financial problems, it will also have a great impact. The financial risks of M&A mainly include the uncertainty of capital sources, the diversity of financing channels, the high growth of financing costs and the fluctuation of exchange rate.

Legal basis: People's Republic of China (PRC) Company Law.

Article 172 The merger of companies may take the form of absorption merger or new merger.

A company absorbs other companies for merger, and the absorbed company is dissolved. The merger of two or more companies to form a new company is a new merger, and the parties to the merger are dissolved.

Article 173 When a company is merged, all parties to the merger shall sign a merger agreement and prepare a balance sheet and a list of assets. The company shall notify the creditors within 10 days from the date of making the merger resolution and make an announcement in the newspaper within 30 days. Creditors may, within 30 days from the date of receiving the notice, or within 45 days from the date of announcement if they have not received the notice, require the company to pay off debts or provide corresponding guarantees.

Article 174 When a company is merged, the creditor's rights and debts of the merging parties shall be inherited by the surviving company or the newly established company after the merger.