Risk Analysis And Countermeasures Of Continuous M&A Of Listed Companies On GEM

Merge and acquisition(M&A)is an important part of the market economy.M&A is not only conducive to the effective allocation of market resources,but also an important way for companies to achieve epitaxial growth.China's M&A market has made tremendous progress in the past ten years.Especially in 2014,the Chinese government issued "Several Opinions on Further Promoting the Healthy Development of Capital Markets",encouraging M&A activities,which gave great promotion to the M&A market in China.The number and amount of transactions:in M&A market increased rapidly after this policy.M&A brings many benefits to the market economy and enterprises.At the same time,there are many risks.Especially when the company conducts continuous M&A activities in a short period of time,the seriousness of this potential risks and uncertainties will be greatly increased,which might cause damage to the production and operation of the enterprises.In order to analyze the risks of continuous mergers and acquisitions,and provide reference for enterprises' M&A act:ivities,this paper uses case study method,and combines M&A theory and practice to deeply analyze the risks of continuous mergers and acquisitions.Case studies on M&A integration in Chinese academia mainly analyze the single M&A activity of a single company,and most case studies select successful cases of M&A integration.Few studies analyze the case of continuous M&A failures.The case study in this article selects the typical phenomenon of continuous mergers and acquisitions of company A,one of the listed companies on the GEM,in a certain period of time.This paper summarizes the experience and lessons of continuous merger and acquisition failures of company A through the risk analysis of continuous mergers and acquisitions of company A for the follow-up The corresponding suggestions on M&A practice activities are also the innovation of this article.Since the case company of this article(referred to as"company A ")has been listed on the GEM in 2011.Its main business(LED digital display device manufacturing)has experienced a lack of growth.In order to find new opportunities of growth Company A began its continuous mergers and acquisitions activities in the advertising media industry and marketing public relations industry in 2014.Company A has successively acquired 13 wholly-owned subsidiaries in 4 years.Especially in 2016,Company A has successively acquired 9 subsidiaries within one year.Continuous mergers and acquisitions brought a series of benefits to Company A,which enabled the rapid growth of the company's scale and profit performance and the rising share price.At the same time,however,continuous mergers have also brought a series of potential risks to Company A.In June 2015,the company's share price continued to fall due to market influence,triggering a series of chain reactions,turning the potential risks of mergers and acquisitions into real risks.Since 2017,the subsidiary has experienced a decline in overall performance.Most of the subsidiaries have failed to fulfill their performance commitments and even incurred losses,which triggered huge loss of goodwill impairment and caused the group's consolidated performance to decline sharply for two consecutive years.Company A's continuous mergers and acquisitions ended in failure.This article summarizes seven consecutive M&A risks from the case of Company A's mergers and acquisitions.They are:strategic risks caused by the lack of comprehensive and in-depth M&A development strategies;the risk of goodwill impairment caused by the excessive valuation of mergers and acquisitions;The risk of inadequate due diligence and integration of mergers and acquisitions;the operating risk and financial fraud risks of the original shareholders of the subsidiary formed by the unreasonable design of the gambling agreement;the risk of damage to the original shareholders of the subsidiary caused by the high proportion of payment in the payment method Financial risks caused by long-term debt investment;synergistic risks caused by unfavorable integration after mergers and acquisitions;and risk of corporate value loss caused by the lack of a crisis handling mechanism.This article proposes seven countermeasures against the risks of continuous mergers and acquisitions from the experience and failures of company A's continuous mergers and acquisitions.They are:scientifically formulate corporate development strategies and avoid risk sources;full due diligence and reasonable valuation of the acquirer's enterprise;Speed,fully integrate the acquirer;rationally design the gambling agreement to achieve a win-win situation for both parties;use stocks as a payment method for mergers and acquisitions to avoid short-term debt and long-term investment;improve integration efficiency and give play to the synergies of both parties;formulate major events Contingency plan and improve risk management and control system.