Research On The Valuation Of Intangible Assets And Its Impact On M&A Premium

In the process of global modernization,the gradual rise of intangible assets-rich industries such as Internet industry and culture industry is a bright spot.Intangible assets,including copyright,domain name,data assets,intellectual property rights,patent technology and so on,bring considerable income to enterprises.People begin to realize the importance of such assets.At present,with the continuous investment of enterprises in R&D,more and more intangible assets have grown into the core competitiveness of enterprises.However,in reality,in order to gain more competitive advantages quickly,improve market share and obtain enterprise benefits,some enterprises choose the way of mergers and acquisitions to achieve those goals,which also causes the frequent occurrence of M&A events in recent years.In 2017,a total of 9524 mergers and acquisitions of listed companies.By comparison,there are 6470 premium mergers and acquisitions,and there are many cases of high premium mergers and acquisitions with tens or even hundreds of times the original valuation.M&A premium and intangible assets have been heatedly discussed in academic circles for a long time.The relationship between them has also become a proposition attracted public attention.In this research process,it is particularly important to define and measure intangible assets accurately.In the existing literature,there are different opinions on the definition of intangible assets and some defects in the measurement methods proposed.Therefore,this paper introduces a new measurement method of intangible assets to make up for the loopholes in the current way to a certain extent.At the same time,it uses the M&A premium as the background to discuss the impact of intangible assets on the M&A premium.This paper takes the phenomena of the substantial increase of intangible assets and M&A premium cases as the research background.First,through literature review,this paper sorts out the definitions of intangible assets,three widely used measurement methods of intangible assets and the factors affecting M&A premium discussed by current scholars,and then analyses the shortcomings of existing literature.Then it introduces a new measurement method of intangible assets,return on tangible assets(ROTA),proposed by foreign scholars,and verifies its applicability in China through empirical analysis,and discusses its advantages and disadvantages compared with other measurement methods.After that,this paper uses ROTA to represent intangible assets variables,chooses enterprise size,asset-liability ratio,growth rate of operating profit,industry,payment method,whether there is synergy effect and year as control variables.Then we make a comprehensive analysis of merger premium cases from 2014 to 2018,explores the correlation between intangible assets and M&A premium and determines the linear expression of them.Finally,through the analysis of the case of Midea Group buy Little Swan announced on October 24,2018,this paper calculates the actual premium level and compares the calculation results of the linear expression obtained by the above analysis.It shows the rationality of the difference between theory and practice and proves the scientificity of the research in this paper.Through the above research,this paper draws the following conclusions: Firstly,return on tangible assets introduced in this paper as a new measure of intangible assets is applicable to the current situation of intangible assets in China,and the new method has certain advantages over the existing methods.Secondly,through the correlation study,we can see that there is a significant positive correlation between intangible assets and M&A premium,and its contribution to M&A premium is higher than that of current assets and fixed assets,which means that the buyer is more willing to pay for the intangible assets of the seller's enterprise.The innovation of this paper is to adopt a more advantageous way to valuate broad intangible assets,and to clarify the linear relationship between intangible assets and M&A premium.Through this study,I hope to provide new ideas for the current intangible assets evaluation,and make useful supplement to existing literature.At the same time,it helps business managers and evaluators to have a deeper understanding of intangible assets,and the relationship between intangible assets and M&A premium is used to provide reference for the decision-making of the premium level in future M&A.