Research On The Risk Of Huge Goodwill Impairment Covered By Mergers And Acquisition Synergy

In recent years,China has promulgated a series of policies and regulations to relax the environment of the merger and acquisition market.Simultaneously,China’s economy has been in important stages of supply-side reform in recent years.Many companies expand and occupy a favorable position through M&A with liberal policy and threat of economic downturn.M & A activities have also ushered in a climax due to the influence from policy and economy,which laid the cornerstone for the accumulation of goodwill.Moreover,due to the large amount of goodwill impairment,the performance diving phenomenon frequently occurs in the capital market,which brought effectively harm to the interests of investors.The risk of goodwill impairment has also become problems for the companies that existed M&A.In particular,some companies have achieved good merger and acquisition synergies,but under the cover of this benign effect,the risk of goodwill impairment is more hidden and easier to ignore.In view of this,this article focuses on the issue of huge amount of goodwill impairment risks when corporate mergers and acquisitions synergies are exerted.This article analyses the phenomenon of the sharp decline in the performance of Zeus Entertainment Company in a good M&A synergies premise,and discusses the specific causes and prevention means of goodwill impairment risks.This article analyzes the issue of corporate goodwill impairment risks under the background that corporate M & A synergies play a good role.It sorts out the research on goodwill and the impairment of goodwill in recent years,and clarifies the research status and research basis.Then,this article selects Zeus Entertainment Company as the study case to analyze the phenomenon that this company had accrued 4 billion goodwill impairment based on the synergy effect after the merger and acquisition,which caused the performance to change from positive to negative.Through analysis,it is found that the company failed to pay sufficient attention and prevention to the factors that may lead to a large risk from huge goodwill impairment.These factors are mainly included in following aspects: A large amount of funds was occupied by the ultra-high-risk M & A fund sector,and the financial risk is high.At the same time,Zeus Entertainment Company had faced with such an urgent operating environment caused by the signing of a more demanding gambling agreement,in addition,excessive premium rate during mergers and acquisitions leads to the accumulation of huge goodwill.The choice of consideration payment method is not reasonable enough to make subsequent resource integration more difficult.In addition,the company’s internal control quality is not high,so that the risk resisting capability gradually decreased.The binding force on the gambling agreement signed with the merged company was weak,which was not conducive to the prevention of the risk of goodwill impairment.In addition,the game industry where Zeus Entertainment Company was located suddenly issued policies to make corporation’ profits lower.In the case of the inflow of benefits brought by the early merger and acquisition synergies,Zeus Entertainment Company failed to prevent potential impairment risks,which caused it to accumulate huge goodwill impairments,and its performance fell steeply.Aiming at the problem that Zeus Entertainment Company’s potential risk of goodwill impairment had not been prevented in time with the cover of its good M & A synergy,it is proposed to strengthen enterprise risk management awareness,pay attention to the valuation stage before the completion of mergers and acquisitions,strengthen the internal control system of the enterprise,pay attention to changes in industry policies,regulate the signing of gambling agreements,and strengthen supervision and information disclosure.