| Since the "Twelfth Five-Year Plan",the film and television industry,as one of the cultural industries,has been developed rapidly under the support of policies.At the same time,due to the adjustment of China’s economic structure,there are more and more M&A activities in the capital market.Many companies in the film and television industry are also involved.The case selected by Huayi Brothers is one of the examples.The high-risk and high-profit combination of the film and television industry has enabled many potential competitors to join the market,and the scarcity of high-quality resources has made the merger and acquisition of the film and television industry a common acceptance.The valuation adjustment mechanism(VAM),as a valuation adjustment tool,aims to make both parties more rational in valuation and has the opportunity to adjust the valuation.However,in the film and television industry M&A market,the VAM has been widely misused and even abused,which in turn led to a series of cases of gambling failures,which also hit the healthy and healthy development of the film and television industry.Therefore,the case of Huayi Brothers’ acquisition of Dongyang Meila was chosen because Huayi Brothers,as the leading enterprise in the film and television industry,has the most typical characteristics of the film and television industry,and because the Huayi Brothers signed the valuation adjustment mechanism to acquire Dongyang Meila,the merger failed.This situation is also a microcosm of the wave of mergers and acquisitions in the national film and television industry.This paper firstly combs the relevant literature on the valuation adjustment mechanism and the theory of corporate financial risk,and finds that there are few documents on the combination of the valuation adjustment mechanism and financial risk.Even if it exists,it is generally believed that the valuation adjustment mechanism can be acquired.Effectively avoiding the risk of mergers and acquisitions is conducive to achieving a win-win situation in mergers and acquisitions.Starting from the specific case of Huayi Brothers’ acquisition of Dongyang Meila,this paper first expounds the currentt status and characteristics of the film industry,and then explains the development status of Huayi Brothers and expresses the reasons for case selection.Then,based on the relevant theories of financial risks of M&A,this paper uses the process analysis method to put the financial affairs of Huayi Brothers from the three stages before,during and after the signing of the valuation adjustment mechanism.The risks are divided into valuation risk,financing risk,debt repayment risk,goodwill impairment risk and tax-related risk.Then,the reasons for Huayi Brothers from the former "film industry first stock" to the current high debt level are discussed.Finally,combined with the analysis of Huayi Brothers’ financial risk,this paper gives suggestions on how to prevent and control the financial risks faced by Huayi Brothers in signing the valuation adjustment mechanism.The conclusion of this paper is that the valuation adjustment mechanism is a very obvious tool,and the reasonable application can promote the win-win situation for both parties.However,due to the characteristics of the film industry,enterprises must maintain an objective and cautious attitude towards the use of the valuation adjustment mechanism.The use of the valuation adjustment mechanism by Huayi Brothers in this merger belongs to the abuse of the valuation adjustment mechanism by the film and television industry.In this case,the high premium brought by the valuation adjustment mechanism caused a huge financial burden for Huayi Brothers,which caused Huayi Brothers to bear huge financial risks and eventually failed.Therefore,this article starts from the case of Huayi Brothers mergers and acquisitions in the film and television industry,and believes that whether it is the film industry or other industries,it should be rational to treat the valuation adjustment mechanism,should not abuse the valuation adjustment mechanism.It is neither proud of complacency nor humiliation,rational use of the valuation adjustment mechanism,and prevention and control of the possible financial risks,and better apply it to China’s increasingly prosperous capital market. |
