Abstract
By employing a comparative analytical method, this article arrives at a series of conclusions which are as follows: The financial risks of acquisitions lie in the possibilities that target companies might over-state their assets value and the owners' rights and interests by the means of inflating assets, income and profits or deflating liabilities on purpose, and these financial risks may possibly lead to the failure of future acquisitions, therefore incur the rise of acquisition cost and cause the outbreak of post-merger risks, so only when enough attention is attached to the necessity of acuqiring full recognition of the target company's real assets and liabilities, the importance of due diligence investigation during the process of acquisitions, and the role that measures like establishing core competence oriented acquisition principles play, can the afore-mentioned unfavorable factors be overcome, and the financial risks minimized. Then a conclusion is drawn that, only when the guidelines of being objective, impartial and comprehensive are adhered to, and the defficiency of the target company's financial statement is carefully analyzed, can the financial risks be avoided.
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