Financial Risk Analysis of Internet M&A: Evidence from Alibaba's Acquisition of Ele.Me

Abstract

The Internet economy has become an important force driving China's economic development. Through mergers and acquisitions, Internet companies have expanded their scale, reduced operating costs, and promoted the development of corporate diversification. Meanwhile, the disruptive development and innovation of Internet enterprises have added many risk factors to the road of Internet M&A. Therefore, it is necessary to take the Internet industry as the entry point to conduct a comprehensive and in-depth analysis of the financial risk prevention. In this case, one can control in the process of M&A, and seek the path and method that can promote the success of M&A. This study puts forward a series of management and control suggestions. Primarily, one needs to cooperate with third-party professional institutions to reduce information asymmetry and select a valuation method suitable for the target company. In addition, it should expand the company's financing channels and choose a reasonable capital structure. Last but not least, reasonable arrangement of payment time, flexible use of multiple payment methods ought to be presented. These studies provide enlightenment for the further exploration of Internet M&A.