The Effectiveness Of VAM On The Control Of Valuation Risk

VAM has been used by many companies after the introduction of the VAM in China since 2003.With the development of the M&A market, the application of the VAM is becoming more and more extensive, but lots of target companies is not up to the standard by their commitment. VAM doesn’t make full use of reducing operational risk and information asymmetry risk, which causes the enterprises to suffer the heavy loss. The role of VAM on reducing merger risk is limited, the main effect is to reduce the valuation risk. Dose VAM effectively reduce the valuation of the risk of mergers and acquisitions? Dose the risk exposed after the end of the VAM? Dose the enterprise use earnings management to transfer risk?This paper uses the case study method to analyze whether the VAM effectively reduces the valuation risk, whether the valuation risk is gradually revealed in the VAM period, whether to expose the hidden risk after the end of the VAM period.Firstly, this paper elaborates the purpose of this study, research significance, innovation point, and then reviews the relevant theoretical basis of VAM.Then I introduce the domestic and foreign scholars on the VAM risk prevention and control literature and introduced the mechanism of VAM in preventing valuation risk.Then, I introduced the status of mergers in the media industry and the merger general situation of Bluefocus, then I select the cases of adequate financial data to analysis, compared committed performance and actual performance to check whether VAM is effective to reduce the risk of valuation.Studies have shown that VAM can effectively reduce the risk of valuation, The design of the terms of the VAM will directly affect the financial performance. To achieve the purpose of reducing merger risk, enterprises should set scientific and reasonable VAM clauses to reduce the merger risk.