Analysis The Effect Of The VAM Applied In M&A

In recent years,the international and domestic economic development rapidly,the enterprise is very difficult to simply rely on their own capital expansion and development,so more and more enterprises choose the way of mergers and acquisitions(M&A),to expand and enhance the competitive advantage of development.One of the main forms of capital operation is M&A,information asymmetry and integration risk exist,and M&A enterprises try to reduce risk by using different financial instruments.As an effective financial tool,the Valuation Adjustment Mechanism(VAM)is introduced into the M&A activities.It can reduce the asymmetry of information and alleviatethe integration risk after M&A.In the M&A activities,the VAM is used more and more.In the restructured company that applies to VAM,many enterprises have completed the VAM and achieved the rapid development of target businesses.Of course,many enterprises fail to take a gamble.They take legal action seriously,and they lose their control right by losing the business to the investor.In the use of the VAM,the two parties must fully understand the legal rules and regulations of the VAM and see if it is necessary to introduce the VAM between the two parties in the M&A.The reasonable design of the terms of the VAM,thus alleviating the information asymmetry,realizing the financing demand and rapid development of the merged enterprises,and the investment income of the M&A party,and achieving the win-win of the betting parties.In the current economic situation,China’s film and television industry is developing rapidly.Many film and television enterprises are eager to enter the capital market,choose IPO,borrow the shell and other ways to realize the market,and some listed companies have the first choice to acquire film and television enterprises to realize the strategic transformation.In the boom of film and TV M&A from 2013 to 2016,the signing of the VAM became normally,so this paper chooses film and television enterprises as a case study.This paper first combs the relevant research literature on our country and abroad,then expounds the concept theory of VAM,and then takes the case of the Great Wall film and television as a breakthrough point,and uses literature research,case study and quantitative and qualitative methods to evaluate the purpose of the VAM.The process of VAM and the result of VAM are analyzed,and the corresponding countermeasures and suggestions are given for the problems existing in the VAM.Through the study of the process of merger and acquisition of the Great Wall film and television,this paper draws the following conclusions: Firstly,the signing of the VAM of the Great Wall film and television can reduce the risk of valuation,reduce the agency cost of the investors and alleviate the asymmetric information between the two sides.Secondly,through the analysis of the effect of the Great Wall film and television on the whole event of M & A,we can see that the VAM has improved the financial and non financial situation of the Great Wall film and television,especially the profitability and the quality of profit,which is encouraged by the stock right to the management,and has completed the layout of the strategic industry chain and stabilized the industry.Brand image and status.Finally,we found the problem that there is a single set of betting indicators in the the Great Wall film and television agreement,the target of both sides deviated,and the core business competitiveness of the company slipped,and the corresponding countermeasures were put forward.For the two parties to make a comprehensive consideration of many factors to formulate reasonable target performance indicators,enterprises should enhance their core competitiveness,both sides should ensure continuous information communication and communication,establish a continuous flow of risk management system,and safeguard the interests of both sides.Making VAM an investment safeguard means for investors,and also a tool for the financiers to achieve rapid growth.