Research On The M&A Premium And Performance Of Cultural Enterprises

In recent years, as a national economy important industry sector which the central government attaches great importance to promoting and supporting, the cultural industry faces an opportunity of development and prosperity. There is an upsurge of merger and reorganization in the industry. Along with the boom of M&A, the phenomenon of high valuations and high premiums has caused the widespread concern of the society from all walks of life. This article takes the method of case study to analyse the causes of the high premium for cultural enterprises’M&A and the influence of the high premium on the post-acquisition performance. By exploring the rationality of the phenomenon, this paper provides some thinking and enlightenments for enterprises in this industry who will carry out M&A transactions in the future.Based on the relevant theory and research methods of the M&A premium and M&A performance, this paper gives the descriptive statistics of M&A transactions’ present situation in the cultural industry, the high acquisition premium phenomenon and the sample characteristics through using the method of statistical analysis. It takes Huayi Brother merging Yinhan Technology to discuss the causes of the acquisition premium from the perspective of the cultural industry characteristics, the target firm’s performance before the merger, the M&A synergy and the competition game between the acquirer and target, and then evaluate the M&A performance. The acquisition gets relatively positive effects from the market level and company level both, and has good influences on the long-term development of the acquirer as well as the target. It is a successful acquisition activity.The case research indicates that the high value and high premium phenomenon in the cultural enterprises’M&A can be reasonably explained by several factors such as the M&A synergy and the cultural industry characteristics, and produces a positive effect on the economic consequence after the merger. Therefore the acquisition premium is supposed to be in the proper range. This article suggests that the main reason why the premium of cultural industry’s M&A is higher than that of other industrys’is that there is a book-value reflection defect caused by the cultural industry’s characteristics. According to the above, this paper suggests cultural enterprises when they take merger activities they should focus on the follow aspects. First, improve the present assets appraisal methods. Second, pay attention to the price-making process of the M&A. Third, strengthen management measures reducing the acquisition premium risk.