Analysis On The Failure Of Longwei Media Acquisition Of Wanjia Culture From The Perspective Of Risk

With the sustainable development and amelioration of China’s financial market,it has become one of the important means to expand the scale and improve the competitiveness of enterprises to complete the acquisition between enterprises by means of leverage.Therefore,enterprises are often willing to use leverage to acquire other enterprises in order to rapidly expand the scale of enterprises in the process of growing up.However,in the course of leveraged buyout,there are many risk factors due to the problems of asymmetric information and high leverage ratio,which ultimately leads to the failure of leveraged buyout program.Therefore,it is necessary to analyze the reasons for the failure of leveraged buyout from the perspective of risk,so as to provide theoretical reference and guidance for related enterprises to carry out leveraged buyout.This paper selects the highly leveraged acquisition example of case,Longwei media’s leveraged acquisition of Wanjia culture,as the research object.First of all,this paper comprehensively combs the way,motivation,process and result of Longwei media’s acquisition of Wanjia culture.Secondly,based on the risk perspective,this paper analyzes four risk factors that lead to the failure of Longwei media’s acquisition of Wanjia culture by leverage,including valuation risk,funding risk,financial risk and legal risk.Further analysis of the causes of risk,valuation risk is due to the acquirer’s failure to perform due diligence.The financing risk is due to the poor situation of the acquirer itself,the high leverage ratio of financing and the cautious attitude of the fund provider towards the risk.Legal risk is due to information disclosure in violation of laws and regulations.In view of these risk factors,risk avoidance measures are proposed again.One,in response to valuation risk,fully understand the basic information of the target company and sign the performance commitment compensation agreement.Two,to deal with funding risk,optimize the financing capital structure and enrich the financing channels.Three,to deal with financing risk,control the leverage ratio and reasonably plan the capital operation path.Four,in response to legal risks,enhance the construction of information disclosure regulation system,enhance the supervision and punishment,and build the credit evaluation system of the financial market.Finally,this paper summarizes the conclusions of this study and puts forward the leveraged buyout model from the risk perspective,and looks forward to the shortcomings in the writing process.