Risk Of Goodwill Impairment Under The Bet Agreement And Its Prevention

With the continuous development of the socialist market economy,many companies have adopted mergers and acquisitions to pursue their own development and enhance their strength.With the support of national policies,since 2013,the number of corporate mergers and acquisitions has continued to increase.In order to quickly seize the market,some enterprises have adopted high valuation and high premium methods to achieve corporate mergers and acquisitions,resulting in the generation of huge amounts of goodwill.In domestic M & A cases,most companies use the income method as the method of M & A valuation,but due to the uncertainty of the company ’s future operations under the income method,these huge amounts of goodwill are often accounted for a large amount of impairment in the later stages of the merger The preparation hurt the interests of both parties.As a result,many companies have added gambling agreements as risk management tools in mergers and acquisitions,hoping to reduce the risks posed by mergers and acquisitions.However,due to the lack of correct understanding and improper use of the gambling agreement,the gambling agreement as a risk management tool did not play its original role,but caused the risk of impairment of goodwill to a certain extent.Therefore,how to correctly understand and use the gambling agreement to solve the subsequent goodwill impairment risk in mergers and acquisitions is a problem worthy of study.This paper analyzes the mechanism of the formation of goodwill impairment risk under gambling agreements by combing the relevant literature on gambling agreements and goodwill impairment risks,based on options theory,incentive theory,information asymmetry and other theories,mainly including improper distortion of gambling agreements The transaction consideration and performance target setting are unreasonable,the performance compensation obligation is difficult to achieve,and the management behavior is not constrained.Then,select Aofei Entertainment M & A as the object of the case study,analyze the settings of the gambling agreement and the goodwill impairment situation in the case,and analyze that the risks of the goodwill impairment under the gambling agreement in the case are mainly the M & A premium risk,Performance target setting risk,insufficient compensation risk and management behavior risk.Finally,for the unreasonable setting of the gambling agreement in the M & A case,there are four aspects from controlling the high premium under thegambling agreement,setting reasonable goals for the gambling performance,supervising the management of the merged party,and promoting compensation for the gambling performance Put forward measures to prevent the risk of impairment of goodwill.This article believes that the gambling agreement itself has a certain risk prevention and control function,and reasonable use can make both parties to the gambling benefit from it.However,due to the limitations of the gambling agreement itself and the blindness of management’s behavior,the use of the gambling agreement must be cautious and objective.In this case,the unreasonable setting of the gambling agreement brought the risk of impairment of goodwill to Aofei Entertainment,seriously damaged the interests of the merger and acquisition,and ultimately led to the impairment of the goodwill of the merger and acquisition.Therefore,enterprises need to pay attention to the risk of impairment of goodwill under the gambling agreement,and correctly sign and use the gambling agreement to ensure the realization of the M & A goal.