Research On Identification And Prevention Of Gambling Risks In Enterprise Mergers And Acquisitions

In the context of globalization of the world economy,with the increasingly fierce market,the company has achieved effective integration of resources in a short time,expanded business channels,expanded enterprise scale and expanded market share through enterprise mergers and acquisitions.Mergers and acquisitions enable the company to have diversified commodities and diversified business methods,improve the company’s development ability,and better withstand the impact of risks.Through merger and reorganization,we can effectively realize the transformation of our resources and industries,and also promote our companies to achieve their own development and achieve better internationalization.The use of VAM is increasingly common in China.It is a system with regulatory value.It can make up for the information asymmetry between the two parties in a sense,which is conducive to concluding transactions and protecting the rights and interests of small and medium-sized shareholders.The VAM agreement specifies the goals that both parties must achieve in the VAM stage,providing both parties with expected profits,as well as external resources and short-term financing for the acquiree.However,the adoption of VAM will also bring certain risks to the company,and the company’s M&A still has the possibility of failure.In recent years,many companies have not achieved the expected development after being acquired,leading to the failure of the VAM,and finally failed to successfully perform the VAM.If the gamble between the two parties fails,it will lead to huge losses for both parties.Therefore,this paper discusses the application and risk management of VAM in M&A.This paper takes the successful cross-border gambling case of Company A’s merger and acquisition of Company B and Company C as the research object.First,it introduces the merger motivation,gambling motivation,transaction scheme,gambling agreement design and the results of performance gambling in this case.From the perspective of Company A,it uses the HHM rank full interest model to identify the risks related to gambling in this merger and acquisition transaction,including the risks related to merger and acquisition decisions before the signing of the gambling agreement,and the risk of due diligence relaxation,In the middle of the signing of the VAM agreement,there were problems such as inaccurate valuation of the enterprise when the VAM contract was signed and too high VAM performance setting;At the later stage of the signing of the VAM contract,there are many risks such as financial fraud,unfavorable business integration,etc.,which will make the VAM transaction lose.Based on the above analysis,this paper concludes with a summary of the successful experience of Company A in this round of gambling,and puts forward some countermeasures and suggestions for improvement in terms of some problems in contract design and risk management,such as: revising indicators,designing diversified standards,management integration agreements,designing repeated games,improving the post gambling review period,developing a gambling risk prevention mechanism,etc.Finally,it summarizes the relevant empirical model of the signing of the VAM in the merger and acquisition of the company,so as to better use the VAM and effectively prevent the risks arising therefrom.