A Study On The Motivation And Economic Consequences Of Jinyi Culture’s Continuous High-premium M&A

Since the regulatory policy was relaxed in 2014,the endogenous development-led model has been unable to meet the needs of the rapid development of enterprises.Therefore,enterprises frequently adopt mergers and acquisitions to improve competitiveness.However,valuations and premium rates in M&A are rising,and high premium M&A deals are becoming more common.In recent years,the success rate of high-priced mergers and acquisitions of many enterprises has been declining,which has brought serious impact on the performance of enterprises and the stability of the capital market.Based on this research background,this thesis takes the events of Beijing Jinyi Culture Development Co.,LTD.(hereinafter referred to as Jinyi Culture)which have carried out high-premium mergers and acquisitions continuously as the research object.By using the single case study method,the event study method and the literature study method,this thesis studies the M&A motivation and corresponding M&A performance of the case enterprises at different stages,hoping to provide references for such mergers and acquisitions enterprises.Based on the combination of motivation and economic effect,in terms of motivation,firstly,enterprises are faced with growth pressure after listing.In order to improve performance,it is urgent to reverse the situation through capital operations such as mergers and acquisitions.The imminence of M&A makes the acquirer in a weak position of negotiation and low bargaining power,so the premium level of M&A is high.Secondly,due to the poor stability of main business earnings and low market valuation,enterprises will pursue conceptual mergers and acquisitions to seek new profit growth points,boost enterprises and show performance.Moreover,in order to avoid the risk of forced liquidation,the major shareholders after equity pledge will have a strong motivation to pursue conceptual M&A to improve the market valuation.Under the income valuation method,the hot industry itself has the characteristics of high premium and high valuation.Finally,the high proportion of equity pledge makes the separation of the two rights serious,which strengthens the motivation of hollowing out.The actual controller realizes the equity pledge to cash out and the reduction to cash out after pushing the company’s stock price up through high premium merger and acquisition,and realizes the transfer of interests through self-interested merger and acquisition.In terms of economic consequences,this thesis analyzes the economic consequences of enterprises from the aspects of their financial performance,market performance and influence on shareholders.It can be seen that the continuous high-premium merger and acquisition of Jinyi Culture did not play the expected synergy effect,but accelerated the decline in performance,cash flow deterioration,capital chain break,and finally,the controlling shareholder lost control.The results of the case study are as follows: first,the behavior of "market value management" is more frequent during the period of equity pledge of major shareholders;Second,the continued high proportion of equity pledge will strengthen its incentive to hollow.In terms of consequences,firstly,continuous mergers and acquisitions bring certain financial risks while alleviating the growth pressure of enterprises;Second,the market value management effect brought by conceptual mergers and acquisitions is only temporary positive.Based on the above research findings,this thesis holds that merger and acquisition strategy should be implemented in the aspect of the merger and acquisition enterprise,timely control of merger and acquisition risks;Investors should strengthen the awareness of prevention,rational investment;Regulators should strengthen the supervision of high premium mergers and acquisitions,and increase the violation cost of major shareholders.