A Study On M&A Pricing And Goodwill Impairment Of Dongguan Kingsun Optoelectronic Co.,Ltd.

In recent years,the M&A market in China has continued to heat up,and the scale of mergers and acquisitions has been continuously updated.Meanwhile,the premium level of M&A transactions has skyrocketed,and high-premium mergers and acquisitions have become the new normal in the M&A trading market.With the increase in the size of M&A transactions and the level of premium,the book value of the goodwill of China's listed companies has expanded rapidly,and a number of companies have suffered significant impairment of goodwill.The impairment of goodwill is gradually eating up the profits of listed companies and distorting the allocation of market resources.Therefore,this paper selects Qinshang shares as the case study object,analyzes the transaction price formulation and goodwill impairment of its acquisition of Guangzhou Longwen,to attempt to review the rationality of M&A pricing and find out both the factors that affect M&A pricing of the reasons for the impairment of goodwill,and provide advice on risk aversion for companies and regulatory authorities.This article,under the guidance of the literature,guidelines,policies,and theories related to merger and acquisition pricing and goodwill impairment,first analyzes the pricing situation of Qinshang's share merger and acquisition of Guangzhou Longwen,and finds that the cooperation between Qinshang shares and Guangzhou Longman was poor.Guangzhou Longwen's earnings quality and earnings growth ability is not strong enough to support the transaction price of M&A.The factors that led to the over-pricing of M&A are mainly the overvaluation of the underlying assets,and the main parties are not dominant in the bargaining negotiations.Next,it analyzes the impairment of goodwill on the acquisition of Guangzhou Longwen shares,and concludes that excessively high M&A prices are the culprit for the impairment loss of goodwill.Excessive performance commitment is the trigger for impairment of goodwill.After the merger,the integration problem hindered the company's business and indirectly led to the impairment of goodwill.Accordingly,the following suggestions are made:(1)For enterprises:Avoid blind mergers and acquisitions,follow up with mergers and acquisitions,reasonably determine merger and acquisition transaction prices,focus on mergers and acquisitions risks;attach importance to bargaining negotiations,fully engage in gaming;set reasonable performance commitments;(2)For asset assessment agencies:Improve asset valuation methods,adopt interval pricing,maintain independence;(3)For regulators:strictly control irrational mergers and acquisitions;strengthen information disclosure of mergers 'and acquisitions,enhance information transparency;supervise performance commitments,and increase penalties to enterprises avoid evasion of performance compensation.