# Evaluation of M&A Risk Based on Adaptive Immune Genetic Algorithm

Authors: Huadong Li; Shuo Zhang
Journal: Security and Communication Networks
 (2022)

---

## Abstract

In order to improve the convergence and accuracy of M&A risk assessment method, an M&A risk assessment method based on adaptive immune genetic algorithm is proposed. The risk of M&A is divided into M&A preparation stage, M&A implementation stage, and M&A integration stage. The event tree analysis method is used to clarify the inducement of M&A risk events. We optimize the traditional genetic algorithm, design adaptive immune genetic algorithm to ensure the convergence of risk assessment algorithm, select the risk assessment indicators of enterprise M&A, determine the weight of the assessment indicators, and construct the quantitative model of enterprise M&A risk assessment. The experimental results show that the proposed risk assessment method takes less time, has higher accuracy, and has less probability of enterprise data imbalance.


---

## Body

## 1. Introduction

Synergetic M&A of industrial chain means that the enterprises obtain the control right of the target enterprises through the property right transaction with the upstream and downstream enterprises of industrial chain under the function of market mechanism and then obtain the scale benefit. It is also an important way for enterprises to carry out the layout of the industrial chain or for the government to realize the optimized allocation of resources [1]. With the development and maturity of capital market at home and abroad, M&A has become one of the important strategic decisions for enterprises to expand scale, improve performance, resist market risks, and seek future development. Up to now, the international capital market has gone through five large-scale asset mergers and acquisitions. Some large enterprises have increased their own strength and enlarged their market share through asset mergers and acquisitions. As far as the mode of M&A is concerned, it mainly includes vertical M&A and horizontal M&A. Vertical M&A shall be based on the existing industrial chain, integrate the upstream raw material supply enterprises and downstream product sales enterprises, and reduce the market risks of enterprises by diversified commodity operation modes. Horizontal M&A of enterprises shall be mainly based on the integration of industrial resources, so as to enhance the dominant position of enterprises in the industry to which they belong [2]. The motivation of M&A from the perspective of capital has changed fundamentally, that is, from the original goal of improving the efficiency of enterprises to the goal of serving the overall strategy of enterprises through asset M&A [3]. At present, both the international market and the domestic market are extremely competitive; to ensure that enterprises stand out in the fierce market competition, they need to have a strong market size and core competitiveness. Both vertical and horizontal M&A modes can enlarge the scale and market share of enterprises, and the merger and acquisition of upstream and downstream enterprises in the industry chain can realize the deep integration of capital, technology, talents, information, and other resources and enhance the core market competitiveness and organizational decision-making ability of enterprises.In order to study the risk of M&A, relevant scholars have made an in-depth discussion on this issue. Reference [4] proposes an information security risk assessment method based on the combination of fuzzy theory and BRBPNN (Bayesian regularized BP neural network). Firstly, the risk assessment index system and risk assessment model are established. Secondly, the original data is processed by fuzzy theory. Finally, the BP neural network is trained by BR algorithm. Reference [5] constructs an enterprise risk knowledge map and completely expounds the construction process of knowledge map from four aspects: ontology construction, knowledge extraction, knowledge fusion, and knowledge storage. Finally, based on the enterprise risk knowledge map, an intelligent question answering robot is constructed to realize the retrieval and utilization of the knowledge map. In order to improve the accuracy of the question answering system, the BiLSTM-CRF named entity recognition model based on word level is used. In reference [6], in order to comprehensively analyze the internal and external risks faced by domestic trade liner enterprises in different development stages, the authors judge the life cycle stage of domestic trade liner enterprises and analyze the main risks in this stage. Based on the life cycle theory, this paper analyzes the risk characteristics of domestic liner industry and domestic liner enterprises from the two-dimensional perspective of industry and enterprises and divides the life cycle stages of domestic liner industry and domestic liner enterprises by using logistic curve model and comprehensive index method.The above M&A risk assessment methods have the problem of poor convergence, resulting in unsatisfactory risk assessment accuracy and low efficiency. Therefore, an enterprise M&A risk assessment method based on adaptive immune genetic algorithm is proposed.


## 2. Related Concepts

Immune genetic algorithm (IGA) is an optimization algorithm which combines the advantages of immune algorithm (IA) and simple genetic algorithm (SGA).


### 2.1. Genetic Algorithm

Genetic algorithm is a stochastic heuristic global optimization method designed to simulate the process of biological evolution. Its specific steps are as follows:Step 1: Select the appropriate expression form of the solution and the value of each parameter (population size, crossover rate, mutation rate, etc.) according to the actual situation of the problem.Step 2: Randomly generate the initial solution group.Step 3: Evaluate each solution individual in the solution group to obtain the fitness value of each solution.Step 4: Carry out “genetic evolution operation (selection, crossover, and variation)” on the solution population according to the fitness value of the solution to generate a new population.Step 5: Judge whether the end conditions are met. If yes, stop; if no, repeat steps 3 to 5.


### 2.2. Immune Algorithm

Immune algorithm is a multipeak search algorithm designed to simulate the ability of the immune system to recognize a diversity of bacteria (that is, the immune system can recognize almost infinite kinds of bacteria).Its specific steps are as follows:Step 1: According to the actual situation of the problem, select the appropriate expression form of the solution and the values of various parameters (population size, crossover rate, variation rate, concentration threshold, etc.).Step 2: Generate the initial solution group based on the memory elements of the memory bank. If there is no relevant memory in the memory bank, it will be generated randomly.Step 3: Comprehensively evaluate each solution individual in the solution group, including the fitness value (affinity) of solution (antibody) and problem (antigen) and the similarity (affinity) between solutions.Step 4: According to the comprehensive evaluation value of the solution, carry out “proliferation and differentiation operation (selection, crossover, and variation)” on the solution population to generate a new population.Step 5: Judge whether the end condition is met. If yes, end and store the problem feature description and result elements in the memory; if no, repeat steps 3 to 5.


### 2.3. Immune Genetic Algorithm

Inspired by the principle of biological immune system, immune genetic algorithm uses the problem-solving characteristics to vaccinate the population of genetic algorithm on the basis of basic genetic algorithm and retains the optimal individual as memory cell to improve the search speed. The specific process is as follows.Step 1: Antigen recognition module. Antigen is equivalent to the problem to be solved by immune algorithm. Solving a problem with immune algorithm is equivalent to the intrusion of antigen. The antigen recognition module is used to judge whether the invading antigen is an antigen that has been encountered before.Step 2: Initial antibody generation module. If the antigen recognition module determines that the invaded antigen is an antigen that has been encountered, the corresponding antibody is taken out from the memory cell (i.e., memory unit) to form the initial population of the immune algorithm. Otherwise, the initial population is randomly generated. The advantage is that the fitness of antibodies extracted from memory units is relatively high and has a certain diversity. Obviously, this method speeds up the search speed of immune algorithm.Step 3: Antibody fitness evaluation module. Calculate the fitness of all antibodies (i.e., individuals) in the current population.Step 4: Module of differentiating into memory cells (updating database). If the antigen is new, calculate the similarity between the antibody with high fitness and the antibody in the memory unit in the current population, and replace the antibody with the antibody with the highest affinity in the memory unit. The antibody with high fitness is put into the memory unit while maintaining the diversity of antibodies in the memory unit.Step 5: Antibody promotion and inhibition module. The promotion and inhibition of antibody are related to the concentration and fitness of antibody. Generally, the higher the concentration of the antibody, the less likely the antibody will be promoted, and the higher the fitness of the antibody, the greater the probability that the antibody will be promoted. The purpose of this is to ensure individual diversity while retaining individuals with high fitness.Step 6: Extraction and vaccination module. The function of immune vaccine is to use local feature information to speed up the process of finding the global optimal solution. It uses local feature information to interfere with the global parallel search process with a certain intensity, suppresses some repetitive work in the solution process, overcomes the blindness of crossover and mutation operators in the original evolutionary strategy algorithm, and can effectively accelerate the convergence speed of the algorithm and improve the quality of the solution.Step 7: Antibody generation module. Generate new antibodies through crossover and mutation operations for the antibodies selected in the previous module. Crossover and mutation operators constitute an essential operation node in immune algorithm. For some complex coding methods, in the process of crossover and mutation, we should not only consider the diversity of antibodies after this operation, but also consider the effectiveness of antibodies.Step 8: Population update module. Take the newly generated population as the current population, eliminate the part with the worst antibody fitness, and then randomly generate some antibodies to join the offspring for the evolution of the next generation.


## 2.1. Genetic Algorithm

Genetic algorithm is a stochastic heuristic global optimization method designed to simulate the process of biological evolution. Its specific steps are as follows:Step 1: Select the appropriate expression form of the solution and the value of each parameter (population size, crossover rate, mutation rate, etc.) according to the actual situation of the problem.Step 2: Randomly generate the initial solution group.Step 3: Evaluate each solution individual in the solution group to obtain the fitness value of each solution.Step 4: Carry out “genetic evolution operation (selection, crossover, and variation)” on the solution population according to the fitness value of the solution to generate a new population.Step 5: Judge whether the end conditions are met. If yes, stop; if no, repeat steps 3 to 5.


## 2.2. Immune Algorithm

Immune algorithm is a multipeak search algorithm designed to simulate the ability of the immune system to recognize a diversity of bacteria (that is, the immune system can recognize almost infinite kinds of bacteria).Its specific steps are as follows:Step 1: According to the actual situation of the problem, select the appropriate expression form of the solution and the values of various parameters (population size, crossover rate, variation rate, concentration threshold, etc.).Step 2: Generate the initial solution group based on the memory elements of the memory bank. If there is no relevant memory in the memory bank, it will be generated randomly.Step 3: Comprehensively evaluate each solution individual in the solution group, including the fitness value (affinity) of solution (antibody) and problem (antigen) and the similarity (affinity) between solutions.Step 4: According to the comprehensive evaluation value of the solution, carry out “proliferation and differentiation operation (selection, crossover, and variation)” on the solution population to generate a new population.Step 5: Judge whether the end condition is met. If yes, end and store the problem feature description and result elements in the memory; if no, repeat steps 3 to 5.


## 2.3. Immune Genetic Algorithm

Inspired by the principle of biological immune system, immune genetic algorithm uses the problem-solving characteristics to vaccinate the population of genetic algorithm on the basis of basic genetic algorithm and retains the optimal individual as memory cell to improve the search speed. The specific process is as follows.Step 1: Antigen recognition module. Antigen is equivalent to the problem to be solved by immune algorithm. Solving a problem with immune algorithm is equivalent to the intrusion of antigen. The antigen recognition module is used to judge whether the invading antigen is an antigen that has been encountered before.Step 2: Initial antibody generation module. If the antigen recognition module determines that the invaded antigen is an antigen that has been encountered, the corresponding antibody is taken out from the memory cell (i.e., memory unit) to form the initial population of the immune algorithm. Otherwise, the initial population is randomly generated. The advantage is that the fitness of antibodies extracted from memory units is relatively high and has a certain diversity. Obviously, this method speeds up the search speed of immune algorithm.Step 3: Antibody fitness evaluation module. Calculate the fitness of all antibodies (i.e., individuals) in the current population.Step 4: Module of differentiating into memory cells (updating database). If the antigen is new, calculate the similarity between the antibody with high fitness and the antibody in the memory unit in the current population, and replace the antibody with the antibody with the highest affinity in the memory unit. The antibody with high fitness is put into the memory unit while maintaining the diversity of antibodies in the memory unit.Step 5: Antibody promotion and inhibition module. The promotion and inhibition of antibody are related to the concentration and fitness of antibody. Generally, the higher the concentration of the antibody, the less likely the antibody will be promoted, and the higher the fitness of the antibody, the greater the probability that the antibody will be promoted. The purpose of this is to ensure individual diversity while retaining individuals with high fitness.Step 6: Extraction and vaccination module. The function of immune vaccine is to use local feature information to speed up the process of finding the global optimal solution. It uses local feature information to interfere with the global parallel search process with a certain intensity, suppresses some repetitive work in the solution process, overcomes the blindness of crossover and mutation operators in the original evolutionary strategy algorithm, and can effectively accelerate the convergence speed of the algorithm and improve the quality of the solution.Step 7: Antibody generation module. Generate new antibodies through crossover and mutation operations for the antibodies selected in the previous module. Crossover and mutation operators constitute an essential operation node in immune algorithm. For some complex coding methods, in the process of crossover and mutation, we should not only consider the diversity of antibodies after this operation, but also consider the effectiveness of antibodies.Step 8: Population update module. Take the newly generated population as the current population, eliminate the part with the worst antibody fitness, and then randomly generate some antibodies to join the offspring for the evolution of the next generation.


## 3. Risk Analysis of M&A

### 3.1. Phasing

#### 3.1.1. Risks in the Preparatory Stage of Merger

The preparatory stage of M&A provides the basis for M&A activities, including strategic decision making, target selection, and due diligence. The risks at this stage mainly stem from factors such as M&A strategic motivation and decision making, M&A strategic synergy assessment, and information asymmetry [7]. Specifically, the risks at this stage are summarized as follows:(1)
Strategic decision-making risks. Strategic risk in mergers and acquisitions refers to the risks arising from the attitude of the management, the strategic motivation for mergers and acquisitions, and the means of realization in making strategic decisions [8]. For example, the risk of M&A will be affected by irrational factors such as overconfidence, strategic motivation, opportunism, and choice of M&A channel.(2)
Strategic collaboration risks. The process of M&A in the industrial chain is mainly aimed at upstream and downstream enterprises. In general, whether the target enterprise have ever cooperated with the acquiring enterprise affects the evaluation of synergies with the acquiring enterprise [9]. In this process, if the strategic synergy effect is too optimistic, it may lead to overestimation of M&A revenue and underestimation of M&A costs, thus increasing the risk of M&A.(3)
Information asymmetry risk. Information asymmetry risk refers to the risk arising from incomplete grasp of the relevant information of the acquired party, which may be embodied in inflating asset risk, asset quality risk, potential contingent liability risk, etc. [10]. The common risks of inflating assets are mainly reflected in the intentional increase in the owner’s equity in the financial statements of the target enterprise, false listing of creditor’s rights and property rights, reduction of allowance items, etc.; the risks of asset quality are mainly reflected in such aspects as the decrease of asset quality caused by the inconsistency between the real value of the assets and the book value or the unclear ownership of the assets; the potential contingent liability risks are the financial risks caused by the concealed contingent liabilities prior to the merger and acquisition [11].


#### 3.1.2. Risks at the stage of merger and acquisition

The stage of M&A implementation means that the acquirer and the acquired party enter into the process of scheme negotiation, contract conclusion, and transaction performance, and the risks mainly involve external intervention risk, legal risk of M&A transaction, anti-M&A risk, financing risk, and potential liquidity risk. The details can be summarized as follows:(1)
Risk of external intervention. In order to optimize the industrial structure of the region or protect the industrial development of the country, the government and its relevant organizations often intervene in the M&A activities of some enterprises. Especially when the objectives of the government and its relevant organizations are contrary to the objectives of the enterprises, there may be adverse interference with the enterprises, so that the M&A of the enterprises cannot achieve the expected objectives or even cannot achieve the objectives [12].(2)
Legal risks in mergers and acquisitions. The merger and acquisition procedures involve cumbersome legal clauses and restrictions, such as amount and price, timing and ratio of consecutive acquisitions, offer norms, norms for merger and acquisition of related parties, and announcement norms, which may result in violation of laws and regulations, imposition of punishment on the enterprise by the relevant organizations or departments, pursuit of criminal liability of the relevant accountable personnel, or even invalidation of the merger and acquisition contract, causing the enterprise to suffer losses and adverse social impact.(3)
Anti-merger and acquisition risks. In many cases, well-performing companies are resistant to mergers and acquisitions, especially when they are acquired by a competitor or a hostile acquirer [13]. As a result, anti-M&A activities are easy to occur, such as seeking alternative acquirers, seeking out high-quality assets, and promoting malicious liabilities, which can cause great potential risks.(4)
Mixed payment risk. Using mixed financing tools to obtain M&A funds, such as convertible bonds and convertible preferred shares, will lead to excessive decentralization of equity and indefinite debt structure, thus inducing M&A risks.(5)
Risks of control rights. Payment for merger and acquisition shall be made in the form of equity. When the ratio of equity transfer is too high, the risk of loss of control rights may easily arise.(6)
Debt concentration and leverage risk. When merger and acquisition funds are mainly derived from debt financing, the risk of debt concentration and maturity repayment may arise, and leverage risk may arise due to excessive debt.(7)
Potential liquidity risks. When the funds for the merger and acquisition originate from internal fund raising, if cash payment is adopted, a large amount of the monetary funds of the acquiring party will be occupied, resulting in the risk of liquidity shortage in the later operation.


#### 3.1.3. Merger and acquisition integration phase risk

M&A integration stage is the operation running-in period after an enterprise completes the M&A process, which may involve internal conflicts at different levels of technology, resources, management, and culture and may also face various external challenges, such as the change of economic environment and policy after the M&A. These factors may induce the risk of M&A integration stage.(1)
Internal risks of merger and acquisition integration. The postmerger integration is not a simple reorganization of production factors, and the integration of management, management mechanism, human resources, technology, and corporate culture is more important. In the short term, differences at the management level may lead to internal losses during the management running-in period, directly affect the launch of various business activities of the enterprise, and cause the loss of market resources, human resources, and technical resources [14]. In the long term, the failure of the acquirer and the acquiree to integrate at the cultural level will lead to continuous conflicts in the operation and management after the merger and acquisition for a long time, so that the operation of the enterprise will fluctuate, thus reducing the operation efficiency of the enterprise and failing to achieve the expected synergistic effect.(2)
Merger, acquisition, and integration of external risks. The economic environment, the policies and regulations of the place where the enterprise is located, and other aspects that are unfavorable to the enterprise, such as the late antimonopoly investigation; the possibility of losing the regional preferential policies due to the change of business entities; the possibility of facing tax collection by various administrative organs, which need to assume various arrears and liabilities for violation of regulations that have not been specified before; and the difference in environmental protection, occupational health, and other standards in the cross-border merger and acquisition may bring potential risks to the business operation after the merger and acquisition of the enterprise [15].


### 3.2. Event Tree Analysis Method

Event tree analysis (ETA) [16, 17] is an important analysis method in the field of systems engineering, which is a decision theory based on systems engineering theory. This method overcomes the dependence of traditional decision methods on experience and subjective judgments and becomes the standard risk analysis method in many countries. Based on the logical analysis of time sequence of risk events, the event tree analysis method first finds out the initial triggering events and then analyzes the triggering events by stages according to the sequence of the evolution of the triggering events. The process of this analysis is represented by a tree structure diagram. This is called an event tree, and its model structure is shown in Figure 1. It describes the dynamic process of the whole event qualitatively and provides a basis for calculating the probability of consequences in each stage of the event development. Through event tree analysis, we can systematically grasp all kinds of possible risk events in the process of system development, identify the causes of risk events in the process of system evolution, and provide basis for taking control measures in advance to avoid risk events.Figure 1
Structure diagram of event tree model.Based on the event tree model in Figure1, the risk incentives of M&A are summarized into two aspects: external incentives and internal incentives. Among them, the external incentives include political and legal factors, mainly including the obstacles brought by the uncertainty of political level, policy level, and legal level to the implementation of enterprise M&A integration; social and humanistic factors, reflected in the differences of social customs, ideology, and cultural origin, which are also the inducement of the risk of M&A integration; macroeconomic environment and market factors, where the risk incentives mainly come from two aspects: macroeconomic situation and market environment. Internal incentives include the lack of knowledge sharing mechanism; establishing a systematic and effective knowledge transfer and sharing mechanism to promote the synergy between enterprises of M&A is the key measure to reduce the risk of M&A integration. Fundamentally speaking, M&A is a process of integration, and the internal difference is the biggest obstacle to integration.


## 3.1. Phasing

### 3.1.1. Risks in the Preparatory Stage of Merger

The preparatory stage of M&A provides the basis for M&A activities, including strategic decision making, target selection, and due diligence. The risks at this stage mainly stem from factors such as M&A strategic motivation and decision making, M&A strategic synergy assessment, and information asymmetry [7]. Specifically, the risks at this stage are summarized as follows:(1)
Strategic decision-making risks. Strategic risk in mergers and acquisitions refers to the risks arising from the attitude of the management, the strategic motivation for mergers and acquisitions, and the means of realization in making strategic decisions [8]. For example, the risk of M&A will be affected by irrational factors such as overconfidence, strategic motivation, opportunism, and choice of M&A channel.(2)
Strategic collaboration risks. The process of M&A in the industrial chain is mainly aimed at upstream and downstream enterprises. In general, whether the target enterprise have ever cooperated with the acquiring enterprise affects the evaluation of synergies with the acquiring enterprise [9]. In this process, if the strategic synergy effect is too optimistic, it may lead to overestimation of M&A revenue and underestimation of M&A costs, thus increasing the risk of M&A.(3)
Information asymmetry risk. Information asymmetry risk refers to the risk arising from incomplete grasp of the relevant information of the acquired party, which may be embodied in inflating asset risk, asset quality risk, potential contingent liability risk, etc. [10]. The common risks of inflating assets are mainly reflected in the intentional increase in the owner’s equity in the financial statements of the target enterprise, false listing of creditor’s rights and property rights, reduction of allowance items, etc.; the risks of asset quality are mainly reflected in such aspects as the decrease of asset quality caused by the inconsistency between the real value of the assets and the book value or the unclear ownership of the assets; the potential contingent liability risks are the financial risks caused by the concealed contingent liabilities prior to the merger and acquisition [11].


### 3.1.2. Risks at the stage of merger and acquisition

The stage of M&A implementation means that the acquirer and the acquired party enter into the process of scheme negotiation, contract conclusion, and transaction performance, and the risks mainly involve external intervention risk, legal risk of M&A transaction, anti-M&A risk, financing risk, and potential liquidity risk. The details can be summarized as follows:(1)
Risk of external intervention. In order to optimize the industrial structure of the region or protect the industrial development of the country, the government and its relevant organizations often intervene in the M&A activities of some enterprises. Especially when the objectives of the government and its relevant organizations are contrary to the objectives of the enterprises, there may be adverse interference with the enterprises, so that the M&A of the enterprises cannot achieve the expected objectives or even cannot achieve the objectives [12].(2)
Legal risks in mergers and acquisitions. The merger and acquisition procedures involve cumbersome legal clauses and restrictions, such as amount and price, timing and ratio of consecutive acquisitions, offer norms, norms for merger and acquisition of related parties, and announcement norms, which may result in violation of laws and regulations, imposition of punishment on the enterprise by the relevant organizations or departments, pursuit of criminal liability of the relevant accountable personnel, or even invalidation of the merger and acquisition contract, causing the enterprise to suffer losses and adverse social impact.(3)
Anti-merger and acquisition risks. In many cases, well-performing companies are resistant to mergers and acquisitions, especially when they are acquired by a competitor or a hostile acquirer [13]. As a result, anti-M&A activities are easy to occur, such as seeking alternative acquirers, seeking out high-quality assets, and promoting malicious liabilities, which can cause great potential risks.(4)
Mixed payment risk. Using mixed financing tools to obtain M&A funds, such as convertible bonds and convertible preferred shares, will lead to excessive decentralization of equity and indefinite debt structure, thus inducing M&A risks.(5)
Risks of control rights. Payment for merger and acquisition shall be made in the form of equity. When the ratio of equity transfer is too high, the risk of loss of control rights may easily arise.(6)
Debt concentration and leverage risk. When merger and acquisition funds are mainly derived from debt financing, the risk of debt concentration and maturity repayment may arise, and leverage risk may arise due to excessive debt.(7)
Potential liquidity risks. When the funds for the merger and acquisition originate from internal fund raising, if cash payment is adopted, a large amount of the monetary funds of the acquiring party will be occupied, resulting in the risk of liquidity shortage in the later operation.


### 3.1.3. Merger and acquisition integration phase risk

M&A integration stage is the operation running-in period after an enterprise completes the M&A process, which may involve internal conflicts at different levels of technology, resources, management, and culture and may also face various external challenges, such as the change of economic environment and policy after the M&A. These factors may induce the risk of M&A integration stage.(1)
Internal risks of merger and acquisition integration. The postmerger integration is not a simple reorganization of production factors, and the integration of management, management mechanism, human resources, technology, and corporate culture is more important. In the short term, differences at the management level may lead to internal losses during the management running-in period, directly affect the launch of various business activities of the enterprise, and cause the loss of market resources, human resources, and technical resources [14]. In the long term, the failure of the acquirer and the acquiree to integrate at the cultural level will lead to continuous conflicts in the operation and management after the merger and acquisition for a long time, so that the operation of the enterprise will fluctuate, thus reducing the operation efficiency of the enterprise and failing to achieve the expected synergistic effect.(2)
Merger, acquisition, and integration of external risks. The economic environment, the policies and regulations of the place where the enterprise is located, and other aspects that are unfavorable to the enterprise, such as the late antimonopoly investigation; the possibility of losing the regional preferential policies due to the change of business entities; the possibility of facing tax collection by various administrative organs, which need to assume various arrears and liabilities for violation of regulations that have not been specified before; and the difference in environmental protection, occupational health, and other standards in the cross-border merger and acquisition may bring potential risks to the business operation after the merger and acquisition of the enterprise [15].


## 3.1.1. Risks in the Preparatory Stage of Merger

The preparatory stage of M&A provides the basis for M&A activities, including strategic decision making, target selection, and due diligence. The risks at this stage mainly stem from factors such as M&A strategic motivation and decision making, M&A strategic synergy assessment, and information asymmetry [7]. Specifically, the risks at this stage are summarized as follows:(1)
Strategic decision-making risks. Strategic risk in mergers and acquisitions refers to the risks arising from the attitude of the management, the strategic motivation for mergers and acquisitions, and the means of realization in making strategic decisions [8]. For example, the risk of M&A will be affected by irrational factors such as overconfidence, strategic motivation, opportunism, and choice of M&A channel.(2)
Strategic collaboration risks. The process of M&A in the industrial chain is mainly aimed at upstream and downstream enterprises. In general, whether the target enterprise have ever cooperated with the acquiring enterprise affects the evaluation of synergies with the acquiring enterprise [9]. In this process, if the strategic synergy effect is too optimistic, it may lead to overestimation of M&A revenue and underestimation of M&A costs, thus increasing the risk of M&A.(3)
Information asymmetry risk. Information asymmetry risk refers to the risk arising from incomplete grasp of the relevant information of the acquired party, which may be embodied in inflating asset risk, asset quality risk, potential contingent liability risk, etc. [10]. The common risks of inflating assets are mainly reflected in the intentional increase in the owner’s equity in the financial statements of the target enterprise, false listing of creditor’s rights and property rights, reduction of allowance items, etc.; the risks of asset quality are mainly reflected in such aspects as the decrease of asset quality caused by the inconsistency between the real value of the assets and the book value or the unclear ownership of the assets; the potential contingent liability risks are the financial risks caused by the concealed contingent liabilities prior to the merger and acquisition [11].


## 3.1.2. Risks at the stage of merger and acquisition

The stage of M&A implementation means that the acquirer and the acquired party enter into the process of scheme negotiation, contract conclusion, and transaction performance, and the risks mainly involve external intervention risk, legal risk of M&A transaction, anti-M&A risk, financing risk, and potential liquidity risk. The details can be summarized as follows:(1)
Risk of external intervention. In order to optimize the industrial structure of the region or protect the industrial development of the country, the government and its relevant organizations often intervene in the M&A activities of some enterprises. Especially when the objectives of the government and its relevant organizations are contrary to the objectives of the enterprises, there may be adverse interference with the enterprises, so that the M&A of the enterprises cannot achieve the expected objectives or even cannot achieve the objectives [12].(2)
Legal risks in mergers and acquisitions. The merger and acquisition procedures involve cumbersome legal clauses and restrictions, such as amount and price, timing and ratio of consecutive acquisitions, offer norms, norms for merger and acquisition of related parties, and announcement norms, which may result in violation of laws and regulations, imposition of punishment on the enterprise by the relevant organizations or departments, pursuit of criminal liability of the relevant accountable personnel, or even invalidation of the merger and acquisition contract, causing the enterprise to suffer losses and adverse social impact.(3)
Anti-merger and acquisition risks. In many cases, well-performing companies are resistant to mergers and acquisitions, especially when they are acquired by a competitor or a hostile acquirer [13]. As a result, anti-M&A activities are easy to occur, such as seeking alternative acquirers, seeking out high-quality assets, and promoting malicious liabilities, which can cause great potential risks.(4)
Mixed payment risk. Using mixed financing tools to obtain M&A funds, such as convertible bonds and convertible preferred shares, will lead to excessive decentralization of equity and indefinite debt structure, thus inducing M&A risks.(5)
Risks of control rights. Payment for merger and acquisition shall be made in the form of equity. When the ratio of equity transfer is too high, the risk of loss of control rights may easily arise.(6)
Debt concentration and leverage risk. When merger and acquisition funds are mainly derived from debt financing, the risk of debt concentration and maturity repayment may arise, and leverage risk may arise due to excessive debt.(7)
Potential liquidity risks. When the funds for the merger and acquisition originate from internal fund raising, if cash payment is adopted, a large amount of the monetary funds of the acquiring party will be occupied, resulting in the risk of liquidity shortage in the later operation.


## 3.1.3. Merger and acquisition integration phase risk

M&A integration stage is the operation running-in period after an enterprise completes the M&A process, which may involve internal conflicts at different levels of technology, resources, management, and culture and may also face various external challenges, such as the change of economic environment and policy after the M&A. These factors may induce the risk of M&A integration stage.(1)
Internal risks of merger and acquisition integration. The postmerger integration is not a simple reorganization of production factors, and the integration of management, management mechanism, human resources, technology, and corporate culture is more important. In the short term, differences at the management level may lead to internal losses during the management running-in period, directly affect the launch of various business activities of the enterprise, and cause the loss of market resources, human resources, and technical resources [14]. In the long term, the failure of the acquirer and the acquiree to integrate at the cultural level will lead to continuous conflicts in the operation and management after the merger and acquisition for a long time, so that the operation of the enterprise will fluctuate, thus reducing the operation efficiency of the enterprise and failing to achieve the expected synergistic effect.(2)
Merger, acquisition, and integration of external risks. The economic environment, the policies and regulations of the place where the enterprise is located, and other aspects that are unfavorable to the enterprise, such as the late antimonopoly investigation; the possibility of losing the regional preferential policies due to the change of business entities; the possibility of facing tax collection by various administrative organs, which need to assume various arrears and liabilities for violation of regulations that have not been specified before; and the difference in environmental protection, occupational health, and other standards in the cross-border merger and acquisition may bring potential risks to the business operation after the merger and acquisition of the enterprise [15].


## 3.2. Event Tree Analysis Method

Event tree analysis (ETA) [16, 17] is an important analysis method in the field of systems engineering, which is a decision theory based on systems engineering theory. This method overcomes the dependence of traditional decision methods on experience and subjective judgments and becomes the standard risk analysis method in many countries. Based on the logical analysis of time sequence of risk events, the event tree analysis method first finds out the initial triggering events and then analyzes the triggering events by stages according to the sequence of the evolution of the triggering events. The process of this analysis is represented by a tree structure diagram. This is called an event tree, and its model structure is shown in Figure 1. It describes the dynamic process of the whole event qualitatively and provides a basis for calculating the probability of consequences in each stage of the event development. Through event tree analysis, we can systematically grasp all kinds of possible risk events in the process of system development, identify the causes of risk events in the process of system evolution, and provide basis for taking control measures in advance to avoid risk events.Figure 1
Structure diagram of event tree model.Based on the event tree model in Figure1, the risk incentives of M&A are summarized into two aspects: external incentives and internal incentives. Among them, the external incentives include political and legal factors, mainly including the obstacles brought by the uncertainty of political level, policy level, and legal level to the implementation of enterprise M&A integration; social and humanistic factors, reflected in the differences of social customs, ideology, and cultural origin, which are also the inducement of the risk of M&A integration; macroeconomic environment and market factors, where the risk incentives mainly come from two aspects: macroeconomic situation and market environment. Internal incentives include the lack of knowledge sharing mechanism; establishing a systematic and effective knowledge transfer and sharing mechanism to promote the synergy between enterprises of M&A is the key measure to reduce the risk of M&A integration. Fundamentally speaking, M&A is a process of integration, and the internal difference is the biggest obstacle to integration.


## 4. Immune Genetic Algorithm Analysis

### 4.1. Traditional Immune Genetic Algorithm

Immune genetic algorithm combines immunological theory and basic genetic algorithm and has the adaptive characteristics of providing the optimal solution of multiobjective function [18, 19]. Formulas (1) and (2) show the individual concentration expression of antibody v in the traditional immune algorithm:(1)cv=1N∑w=1NAv,w.The value ofAv,w in (1) is as follows:(2)Av,w=1,av,w≥T,0,other.In (2), the affinity between antibody v and w is expressed by av,w, the total number of antibodies contained in the population is expressed by N, and the preset threshold is T. When calculating av,w, the traditional algorithm applies the information entropy strategy, which has the following two disadvantages:(1)
It is assumed that there is a population composed of similar antibodies, which is different, but the optimization calculation shows that the above antibodies have convergence.(2)
Assuming that antibodies are selected from discontinuous optimization functions, according to the information entropy strategy, the two antibodies shall be similar, but because the function is discontinuous, there shall be a large difference in the fitness of the two antibodies, which indicates that the two antibodies are not similar.To sum up, in the calculation of antibody affinity, we should not only consider the similarity of structure space, but also consider the similarity of fitness value.


### 4.2. Adaptive Immune Genetic Algorithm

Adaptive immune genetic algorithm mainly takes environment, population, and individual as the starting point; comprehensively considers the mapping relationship between optimization ability and crossover rate and mutation rate; and completes intelligent optimization calculation through parameter adjustment [20].The component of antibody groupP is set as adaptive antibody p1,p2,…,pN, and its length is l. If P is the K×L matrix, the gene value of position g of antibody i is pji. The current evolutionary algebra and the total evolutionary algebra are represented by cg and g, respectively. The best fitness value and its mean value of the t generation population are represented by Fmaxt and Favgt, respectively. The fitness mean values of the current two cross antibodies and variant antibodies are represented by fc and fm, respectively. The excellence of cross antibodies and variant antibodies is described by α=fc/Fmaxcg and β=fm/Fmaxcg. The difference of the best fitness of the population is set as Fmaxn, and the evolution rate is Pctcg=cg/g.When the value ofPctcg is small, it indicates that the algorithm is in the initial stage. At this time, the search operation should choose a larger crossover rate Pc and mutation rate Pm1. On the contrary, if the value of Pctcg is large, it indicates that the algorithm is about to terminate, and small Pc and Pm1 should be selected. If G is small, it means that the optimization progress is slow. The selection of Pc and Pm1 is the same as the algorithm in the initial stage. When k is large, it means that the optimization result is about to be generated. Fine-tune or keep Pc and Pm1 unchanged.The diversity in genes is expressed by the following formula:(3)dgw=∑i=1K∑j=1Lpji−U2K×L.In (3), the formula of U is as follows:(4)U=∑i=1NpjiN.Value range ofαand B is 0,1. When the value is large, maintain or fine-tune the intersection position η and variation rate Pm2. The value range of F is 0,0.25 0. When its value is large, the control degree of intersection position η should be the same, and the variation rate Pm2 should be reduced.


## 4.1. Traditional Immune Genetic Algorithm

Immune genetic algorithm combines immunological theory and basic genetic algorithm and has the adaptive characteristics of providing the optimal solution of multiobjective function [18, 19]. Formulas (1) and (2) show the individual concentration expression of antibody v in the traditional immune algorithm:(1)cv=1N∑w=1NAv,w.The value ofAv,w in (1) is as follows:(2)Av,w=1,av,w≥T,0,other.In (2), the affinity between antibody v and w is expressed by av,w, the total number of antibodies contained in the population is expressed by N, and the preset threshold is T. When calculating av,w, the traditional algorithm applies the information entropy strategy, which has the following two disadvantages:(1)
It is assumed that there is a population composed of similar antibodies, which is different, but the optimization calculation shows that the above antibodies have convergence.(2)
Assuming that antibodies are selected from discontinuous optimization functions, according to the information entropy strategy, the two antibodies shall be similar, but because the function is discontinuous, there shall be a large difference in the fitness of the two antibodies, which indicates that the two antibodies are not similar.To sum up, in the calculation of antibody affinity, we should not only consider the similarity of structure space, but also consider the similarity of fitness value.


## 4.2. Adaptive Immune Genetic Algorithm

Adaptive immune genetic algorithm mainly takes environment, population, and individual as the starting point; comprehensively considers the mapping relationship between optimization ability and crossover rate and mutation rate; and completes intelligent optimization calculation through parameter adjustment [20].The component of antibody groupP is set as adaptive antibody p1,p2,…,pN, and its length is l. If P is the K×L matrix, the gene value of position g of antibody i is pji. The current evolutionary algebra and the total evolutionary algebra are represented by cg and g, respectively. The best fitness value and its mean value of the t generation population are represented by Fmaxt and Favgt, respectively. The fitness mean values of the current two cross antibodies and variant antibodies are represented by fc and fm, respectively. The excellence of cross antibodies and variant antibodies is described by α=fc/Fmaxcg and β=fm/Fmaxcg. The difference of the best fitness of the population is set as Fmaxn, and the evolution rate is Pctcg=cg/g.When the value ofPctcg is small, it indicates that the algorithm is in the initial stage. At this time, the search operation should choose a larger crossover rate Pc and mutation rate Pm1. On the contrary, if the value of Pctcg is large, it indicates that the algorithm is about to terminate, and small Pc and Pm1 should be selected. If G is small, it means that the optimization progress is slow. The selection of Pc and Pm1 is the same as the algorithm in the initial stage. When k is large, it means that the optimization result is about to be generated. Fine-tune or keep Pc and Pm1 unchanged.The diversity in genes is expressed by the following formula:(3)dgw=∑i=1K∑j=1Lpji−U2K×L.In (3), the formula of U is as follows:(4)U=∑i=1NpjiN.Value range ofαand B is 0,1. When the value is large, maintain or fine-tune the intersection position η and variation rate Pm2. The value range of F is 0,0.25 0. When its value is large, the control degree of intersection position η should be the same, and the variation rate Pm2 should be reduced.


## 5. Enterprise M&A Risk Assessment Model

### 5.1. Selection of Risk Assessment Indicators for M&A

A comprehensive analysis of the risks in the preparation stage, implementation stage, and integration stage of M&A shows that the process of M&A will be affected by many factors, mainly including three aspects: human factors, technical factors, and management factors [12, 21]. It is difficult to analyze the factors of humans, technology, and management separately. For the security of M&A, the three are the unity of opposites and have the relationship of mutual restraint, mutual influence, and mutual development.Based on the above analysis, the risk assessment indicators for M&A are selected as shown in Table1.Table 1
Risk assessment index table of M&A.
Primary evaluation indexCodeSecondary evaluation indexHuman factorsA1Human needsTechnical factorsA2Human qualitiesManagement factorsA3Human technologyPrimary evaluation indexB1Technical safetyHuman factorsB2Technical advanceTechnical factorsB3Technical applicabilityManagement factorsC1Resource safety awarenessC2Formulation of safety regulationsC3Division of safety responsibilitiesC4Risk response mechanismAccording to the risk assessment value level in Table2, the corresponding quantitative value adopts the percentage system. When the risk level is medium risk and high risk, it indicates that the risk of enterprise M&A is very high and risk avoidance needs to be implemented immediately. When the risk level is low, it indicates that the risk level of enterprise M&A is low and risk control can be carried out regularly through corresponding measures. When the risk level is no risk, it means that the risk of M&A is very low and there is no need for risk management.Table 2
Risk degree determination rules.
RiskRisk evaluation valueExplanationDegree[0, 60]The M&A platform operates normally, and there is no possibility of riskNo risk[60, 75]The operation of the M&A platform is basically stable, and there is a possibility of riskLow risk[75, 90]The operation of M&A platform fluctuates, and there is an obvious possibility of riskMedium risk[90, 100]The operation of the M&A platform deteriorates, and risks may occurThe above process completes the selection of risk assessment indicators for M&A and prepares for the following risk assessment.


### 5.2. Determination of Evaluation Index Weight

Based on the selected M&A risk assessment indicators, the Delphi method is adopted to determine the weight of risk assessment indicators. The specific weight calculation process is as follows [22].Delphi method is a kind of expert consultation method in essence, which is widely used in risk assessment. This method has the advantage of high accuracy, but the process is complicated. The Delphi process is shown in Figure2.Figure 2
Flow chart of Delphi method.Execute the process shown in Figure2 to obtain the weight matrices A, V, and T, which are expressed as human factor weight value, technical factor weight value, and management factor weight value, respectively.


### 5.3. Establishment of Quantitative Risk Assessment Model

Based on the above-mentioned weight matrix of evaluation indicators, the quantitative model of M&A risk evaluation is established to provide model support for risk evaluation [12, 23].The basic model for enterprise merger risk assessment is as follows:(5)R=FA,V,T,C.Among them,R refers to the risk of M&A, and C refers to the existing risk control measures [24].In terms of risks as defined by ISO/IEC, which can be expressed in terms of vulnerability to threats, severity of possibility, etc., (5) can be expressed as follows:(6)R=FPt,Pv,V.In the formula,Pt refers to the probability of a threat occurring, Pv to the severity of vulnerability, and V to the efficiency of mergers and acquisitions [25].The range of the probability of threat occurrence is0,1, which reflects the possibility of risk events. The closer the probability of threat to 1, the greater the probability of risk events, and vice versa.Vulnerability severityPv is an objective existence, but only when the threat is exploited, will it bring risks to M&A. The greater the severity of vulnerability, the greater the risk of M&A [26].The effectiveness of risk control measures also determines the possibility of risk events and affects the accuracy of risk assessment. The more effective the risk control measures are, the less the risk of M&A is. The effective degree of risk control measures can be calculated as follows:(7)Sm=1−NvN.Among them,Nv refers to the number of times the risks of the enterprise merger and acquisition platform occur, and N refers to the total number of times the enterprise merger and acquisition platform is threatened and attacked.Based on the actual situation, it is known that the occurrence of risk events of the enterprise merger and acquisition platform is random and statistical law [10]. Therefore, Poisson distribution is used to quantify risk assessment indicators.The Poisson distribution sets the random variablex to 0,+∞, and the formula is as follows:(8)PX=k=e−λλkk!.Among them,λ is a constant, meaning the average frequency of random events per unit time [27], with a range of 0,+∞, and the random variable x is subject to the Poisson distribution of parameter λ, with an abbreviation of xΠλ.Whenλ reaches its maximum value, the Poisson distribution formula can be converted to a normal distribution formula, expressed as follows:(9)PX=n=en−λ2/2λ.In summary, Poisson distribution is used to quantify risk assessment indicators [28, 29], and the quantitative model of M&A risk assessment is obtained using formula (9):(10)Rt=∑k=1kV×e−λλkk!×Pv,k<10,Rt=∑k=1kV×12πλen−λ2/2λ×Pv,k≥10.In order to verify the effectiveness of the quantitative model of M&A risk assessment obtained by (10), it is necessary to solve and analyze it to verify the accuracy of the assessment.


### 5.4. Calculation of Optimal Solution of Model Parameters

Based on the quantitative model of M&A risk evaluation, the optimal solution of parameters is calculated by adaptive immune genetic algorithm, and the risk evaluation interval is worked out. The evaluation of M&A risk based on adaptive immune genetic algorithm is realized [30].As is known from (6), the values of Rt and k need to be calculated, as shown in Figure 3.Figure 3
Calculation flow chart of optimal solution of model parameters.As shown in the flow chart in Figure3, set the initial population as Chrom=Rt1,k1,…,Rti,ki,…,Rt20,k20, where the values of Rti and ki represent the real values within the value range of Rt and k, respectively.Calculate the individual fitness of the population [31], and the calculation formula is as follows:(11)fitness=Vj−Vi.Among them,Vj is the fitness value of individual population, and Vi is the evaluation value of experts. The lower the fitness value, the greater the chance that the individual will be retained in a new generation of populations [32, 33]. Based on the calculation results of (11), the best individual is obtained through selection, crossover, and variation operations, and the corresponding value is the optimal solution of the model parameters. Substitution (6) is the optimal quantitative model for M&A risk evaluation. The sample data is input into the model, and the M&A risk evaluation value is obtained. On this basis, the risk degree is determined according to the rules in Table 2.The above process completes the design and operation of enterprise M&A risk assessment model based on adaptive immune genetic algorithm, which provides a more effective guarantee for the safety of enterprise M&A.


## 5.1. Selection of Risk Assessment Indicators for M&A

A comprehensive analysis of the risks in the preparation stage, implementation stage, and integration stage of M&A shows that the process of M&A will be affected by many factors, mainly including three aspects: human factors, technical factors, and management factors [12, 21]. It is difficult to analyze the factors of humans, technology, and management separately. For the security of M&A, the three are the unity of opposites and have the relationship of mutual restraint, mutual influence, and mutual development.Based on the above analysis, the risk assessment indicators for M&A are selected as shown in Table1.Table 1
Risk assessment index table of M&A.
Primary evaluation indexCodeSecondary evaluation indexHuman factorsA1Human needsTechnical factorsA2Human qualitiesManagement factorsA3Human technologyPrimary evaluation indexB1Technical safetyHuman factorsB2Technical advanceTechnical factorsB3Technical applicabilityManagement factorsC1Resource safety awarenessC2Formulation of safety regulationsC3Division of safety responsibilitiesC4Risk response mechanismAccording to the risk assessment value level in Table2, the corresponding quantitative value adopts the percentage system. When the risk level is medium risk and high risk, it indicates that the risk of enterprise M&A is very high and risk avoidance needs to be implemented immediately. When the risk level is low, it indicates that the risk level of enterprise M&A is low and risk control can be carried out regularly through corresponding measures. When the risk level is no risk, it means that the risk of M&A is very low and there is no need for risk management.Table 2
Risk degree determination rules.
RiskRisk evaluation valueExplanationDegree[0, 60]The M&A platform operates normally, and there is no possibility of riskNo risk[60, 75]The operation of the M&A platform is basically stable, and there is a possibility of riskLow risk[75, 90]The operation of M&A platform fluctuates, and there is an obvious possibility of riskMedium risk[90, 100]The operation of the M&A platform deteriorates, and risks may occurThe above process completes the selection of risk assessment indicators for M&A and prepares for the following risk assessment.


## 5.2. Determination of Evaluation Index Weight

Based on the selected M&A risk assessment indicators, the Delphi method is adopted to determine the weight of risk assessment indicators. The specific weight calculation process is as follows [22].Delphi method is a kind of expert consultation method in essence, which is widely used in risk assessment. This method has the advantage of high accuracy, but the process is complicated. The Delphi process is shown in Figure2.Figure 2
Flow chart of Delphi method.Execute the process shown in Figure2 to obtain the weight matrices A, V, and T, which are expressed as human factor weight value, technical factor weight value, and management factor weight value, respectively.


## 5.3. Establishment of Quantitative Risk Assessment Model

Based on the above-mentioned weight matrix of evaluation indicators, the quantitative model of M&A risk evaluation is established to provide model support for risk evaluation [12, 23].The basic model for enterprise merger risk assessment is as follows:(5)R=FA,V,T,C.Among them,R refers to the risk of M&A, and C refers to the existing risk control measures [24].In terms of risks as defined by ISO/IEC, which can be expressed in terms of vulnerability to threats, severity of possibility, etc., (5) can be expressed as follows:(6)R=FPt,Pv,V.In the formula,Pt refers to the probability of a threat occurring, Pv to the severity of vulnerability, and V to the efficiency of mergers and acquisitions [25].The range of the probability of threat occurrence is0,1, which reflects the possibility of risk events. The closer the probability of threat to 1, the greater the probability of risk events, and vice versa.Vulnerability severityPv is an objective existence, but only when the threat is exploited, will it bring risks to M&A. The greater the severity of vulnerability, the greater the risk of M&A [26].The effectiveness of risk control measures also determines the possibility of risk events and affects the accuracy of risk assessment. The more effective the risk control measures are, the less the risk of M&A is. The effective degree of risk control measures can be calculated as follows:(7)Sm=1−NvN.Among them,Nv refers to the number of times the risks of the enterprise merger and acquisition platform occur, and N refers to the total number of times the enterprise merger and acquisition platform is threatened and attacked.Based on the actual situation, it is known that the occurrence of risk events of the enterprise merger and acquisition platform is random and statistical law [10]. Therefore, Poisson distribution is used to quantify risk assessment indicators.The Poisson distribution sets the random variablex to 0,+∞, and the formula is as follows:(8)PX=k=e−λλkk!.Among them,λ is a constant, meaning the average frequency of random events per unit time [27], with a range of 0,+∞, and the random variable x is subject to the Poisson distribution of parameter λ, with an abbreviation of xΠλ.Whenλ reaches its maximum value, the Poisson distribution formula can be converted to a normal distribution formula, expressed as follows:(9)PX=n=en−λ2/2λ.In summary, Poisson distribution is used to quantify risk assessment indicators [28, 29], and the quantitative model of M&A risk assessment is obtained using formula (9):(10)Rt=∑k=1kV×e−λλkk!×Pv,k<10,Rt=∑k=1kV×12πλen−λ2/2λ×Pv,k≥10.In order to verify the effectiveness of the quantitative model of M&A risk assessment obtained by (10), it is necessary to solve and analyze it to verify the accuracy of the assessment.


## 5.4. Calculation of Optimal Solution of Model Parameters

Based on the quantitative model of M&A risk evaluation, the optimal solution of parameters is calculated by adaptive immune genetic algorithm, and the risk evaluation interval is worked out. The evaluation of M&A risk based on adaptive immune genetic algorithm is realized [30].As is known from (6), the values of Rt and k need to be calculated, as shown in Figure 3.Figure 3
Calculation flow chart of optimal solution of model parameters.As shown in the flow chart in Figure3, set the initial population as Chrom=Rt1,k1,…,Rti,ki,…,Rt20,k20, where the values of Rti and ki represent the real values within the value range of Rt and k, respectively.Calculate the individual fitness of the population [31], and the calculation formula is as follows:(11)fitness=Vj−Vi.Among them,Vj is the fitness value of individual population, and Vi is the evaluation value of experts. The lower the fitness value, the greater the chance that the individual will be retained in a new generation of populations [32, 33]. Based on the calculation results of (11), the best individual is obtained through selection, crossover, and variation operations, and the corresponding value is the optimal solution of the model parameters. Substitution (6) is the optimal quantitative model for M&A risk evaluation. The sample data is input into the model, and the M&A risk evaluation value is obtained. On this basis, the risk degree is determined according to the rules in Table 2.The above process completes the design and operation of enterprise M&A risk assessment model based on adaptive immune genetic algorithm, which provides a more effective guarantee for the safety of enterprise M&A.


## 6. Experimental Design and Result Analysis

In order to verify the evaluation performance of M&A risk evaluation model, a simulation experiment is designed. The models used in the experiment are the traditional model and the constructed model.


### 6.1. Experimental Preparation

M&A needs stable network support; therefore, in order to successfully carry out simulation experiments, the first task is to build a stable network environment.The network topology schematic is shown in Figure4.Figure 4
Network topology.Network parameter settings are shown in Table3.Table 3
Network parameter setting.
Parameter nameNumerical valueCompanyMain processorHi3507—Infrared parameters20mSignal to noise ratio>50dBNetwork interface10/100MProtocol supportTCP/IP—Working temperature−10∼+55°Working humidity0–85%Equipment power10WPower supply12VOn the basis of the above experimental conditions,λ in (5) is set to 10 because the Poisson distribution curve is close to the normal distribution curve. Poisson distribution is used to quantify the risk assessment index, as shown in Figure 5.Figure 5
Poisson distribution curve and normal distribution curve.


### 6.2. Analysis of Experimental Results

According to the preparation of the above experiments, the comparative simulation experiment was carried out, and the experimental data were obtained. The comparison of the evaluation time is shown in Table4. The comparison methods of the control group were the risk assessment method based on fuzzy theory and the risk assessment method based on knowledge Atlas, which were proposed in [4, 5], respectively. The experimental results of the different risk assessment methods are shown in Table 4.Table 4
Comparison of evaluation time.
Number of experimentsTime consumption of risk assessment method based on fuzzy theory (ms)Time consumption of risk assessment method based on knowledge graph (ms)Time consumption of the proposed method (ms)2031.035.211.24026.026.511.06031.134.79.18020.128.38.210020.424.49.012015.517.69.414038.527.17.116012.715.96.418018.422.25.020039.139.95.1As the data in Table4 show, the risk assessment methods based on fuzzy theory and knowledge Atlas have a time range of 12.7–39.9 ms, and the model building assessment has a time range of 5.0–11.2 ms. Through the comparative study, it is found that building the model greatly reduces the evaluation time and has better evaluation performance.In the ROC curve, the abscissa is the true case rate, and the ordinate is the false case rate. The larger the area between the ROC curve and the abscissa is, the higher the accuracy of the evaluation result of the method is. The risk evaluation method based on fuzzy theory and the risk evaluation method based on knowledge Atlas, which are put forward in [4], are adopted to evaluate the M&A risk of different enterprises. The obtained ROC curve is shown in Figure 6.Figure 6
ROC curves of different methods: (a) proposed method; (b) risk assessment method based on fuzzy theory; (c) risk assessment method based on knowledge graph.
(a)(b)(c)As can be seen from Figure6, the area of ROC curve and abscissa obtained by the proposed method is large, which shows that the method has high accuracy and can accurately evaluate the credit risk of enterprises.The M&A risk evaluation model based on adaptive immune genetic algorithm, the risk evaluation method based on fuzzy theory proposed in [4], and the risk evaluation method based on knowledge Atlas proposed in [5] shall be adopted for testing. The imbalance rate τ shall be used as an indicator to test the degree of data balance of different methods. The greater the imbalance rate τ is, the greater the data imbalance is, indicating that the formula for calculating the imbalance rate τ is as follows:(12)τ=NmaxNmin.In the expression,Nmax and Nmin represent the maximum and minimum values of the sample data in the set.The imbalance rates of the proposed method, the risk assessment method based on fuzzy theory, and the risk assessment method based on knowledge Atlas are shown in Figure7.Figure 7
Imbalance rates of different methods.According to the data in Figure7, when testing different data sets, the data imbalance rate obtained by the proposed method is below 2.5%. The risk assessment method based on fuzzy theory and the risk assessment method based on knowledge spectrum fluctuate around 15% and 25%, respectively, and the imbalance rate obtained by the proposed method is lower, which indicates that the data obtained by the proposed method has a higher degree of balance, because the method adopts the adaptive stochastic balance RB method to sample the data before constructing the risk assessment model of M&A, so as to improve the balance degree of data.


## 6.1. Experimental Preparation

M&A needs stable network support; therefore, in order to successfully carry out simulation experiments, the first task is to build a stable network environment.The network topology schematic is shown in Figure4.Figure 4
Network topology.Network parameter settings are shown in Table3.Table 3
Network parameter setting.
Parameter nameNumerical valueCompanyMain processorHi3507—Infrared parameters20mSignal to noise ratio>50dBNetwork interface10/100MProtocol supportTCP/IP—Working temperature−10∼+55°Working humidity0–85%Equipment power10WPower supply12VOn the basis of the above experimental conditions,λ in (5) is set to 10 because the Poisson distribution curve is close to the normal distribution curve. Poisson distribution is used to quantify the risk assessment index, as shown in Figure 5.Figure 5
Poisson distribution curve and normal distribution curve.


## 6.2. Analysis of Experimental Results

According to the preparation of the above experiments, the comparative simulation experiment was carried out, and the experimental data were obtained. The comparison of the evaluation time is shown in Table4. The comparison methods of the control group were the risk assessment method based on fuzzy theory and the risk assessment method based on knowledge Atlas, which were proposed in [4, 5], respectively. The experimental results of the different risk assessment methods are shown in Table 4.Table 4
Comparison of evaluation time.
Number of experimentsTime consumption of risk assessment method based on fuzzy theory (ms)Time consumption of risk assessment method based on knowledge graph (ms)Time consumption of the proposed method (ms)2031.035.211.24026.026.511.06031.134.79.18020.128.38.210020.424.49.012015.517.69.414038.527.17.116012.715.96.418018.422.25.020039.139.95.1As the data in Table4 show, the risk assessment methods based on fuzzy theory and knowledge Atlas have a time range of 12.7–39.9 ms, and the model building assessment has a time range of 5.0–11.2 ms. Through the comparative study, it is found that building the model greatly reduces the evaluation time and has better evaluation performance.In the ROC curve, the abscissa is the true case rate, and the ordinate is the false case rate. The larger the area between the ROC curve and the abscissa is, the higher the accuracy of the evaluation result of the method is. The risk evaluation method based on fuzzy theory and the risk evaluation method based on knowledge Atlas, which are put forward in [4], are adopted to evaluate the M&A risk of different enterprises. The obtained ROC curve is shown in Figure 6.Figure 6
ROC curves of different methods: (a) proposed method; (b) risk assessment method based on fuzzy theory; (c) risk assessment method based on knowledge graph.
(a)(b)(c)As can be seen from Figure6, the area of ROC curve and abscissa obtained by the proposed method is large, which shows that the method has high accuracy and can accurately evaluate the credit risk of enterprises.The M&A risk evaluation model based on adaptive immune genetic algorithm, the risk evaluation method based on fuzzy theory proposed in [4], and the risk evaluation method based on knowledge Atlas proposed in [5] shall be adopted for testing. The imbalance rate τ shall be used as an indicator to test the degree of data balance of different methods. The greater the imbalance rate τ is, the greater the data imbalance is, indicating that the formula for calculating the imbalance rate τ is as follows:(12)τ=NmaxNmin.In the expression,Nmax and Nmin represent the maximum and minimum values of the sample data in the set.The imbalance rates of the proposed method, the risk assessment method based on fuzzy theory, and the risk assessment method based on knowledge Atlas are shown in Figure7.Figure 7
Imbalance rates of different methods.According to the data in Figure7, when testing different data sets, the data imbalance rate obtained by the proposed method is below 2.5%. The risk assessment method based on fuzzy theory and the risk assessment method based on knowledge spectrum fluctuate around 15% and 25%, respectively, and the imbalance rate obtained by the proposed method is lower, which indicates that the data obtained by the proposed method has a higher degree of balance, because the method adopts the adaptive stochastic balance RB method to sample the data before constructing the risk assessment model of M&A, so as to improve the balance degree of data.


## 7. Conclusion

In order to solve the problems of poor convergence and low precision of traditional methods for M&A risk evaluation, a new method based on adaptive immune genetic algorithm is proposed. Based on the in-depth analysis of M&A risks, the event tree analysis method is adopted to clarify the inducement of M&A risk events. Adaptive immune genetic algorithm is designed to improve the convergence of risk assessment algorithm. We determine the weight of evaluation index and design the quantitative model of M&A risk evaluation. Experimental results show that the proposed risk assessment method is more accurate and efficient, the enterprise data is more balanced, and the proposed method has better application performance.



---

*Source: 1180099-2022-03-11.xml*