Research On The Motivation And Risk Prevention Of Listed Companies' High Premium Mergers And Acquisitions

Around 2014,with the rapid development of China's capital market,M&A,especially high-premium M&A,became the choice of many listed companies for scale or industry expansion.The scale and transaction amount of M&A became larger and larger,and the proportion of goodwill gradually increased.A high premium often means strong profitability in the future and enterprises usually sign performance commitments to reduce the risk of merger and acquisition.However,with the wave of merger and acquisition gradually subsided,many companies were in poor operating conditions or failed to meet performance commitments,which also exposed the disadvantages brought by high premium M&A and huge goodwill.In 2018,with the release of " Accounting Standard for Business Enterprises No.8——Asset Impairment ",a large number of large-scale goodwill impairment events occurred in stock market,reflecting the negative impact of previous high-premium M&A.At the same time,driven by the national policy support and upgrading of residents' cultural consumption,the culture and education industry was booming,the mergers and acquisitions in this industry also show some characteristics,For example,the scale,the number and the frequency of transactions all increased a lot.With the rapid popularization of the Internet and the arrival of the era of digital economy,the field of online education rises and becomes a hot topic in the capital market.Qtone Education is a GEM company in the field of online education.After landing on the GEM in 2014,it soon started the road of frequent high premium mergers and acquisitions,and once hit the highest price in A-share market.But in 2018,the company suffered a "goodwill shock",which revealed the legacy of the previous high premium mergers and acquisitions.This paper selects the case of Qtone Education,investigates and studies the behavior of major shareholders in the process of M&A,and analyzes the company's operating conditions and changes in important financial indicators in recent years.This is just the logic to obtain the real motivation for Qtone Education's M&A.Among them,the analysis of the behavior of major shareholders also includes the company's private placement,divestment and post-merger integration,striving to provide strong evidence for the conclusion from multiple perspectives.In terms of the structure of the article,based on the research of Chinese and foreign scholars on M&A related theories,this paper first elaborated the development situation of China's education industry,M&A within the industry and the impairment of goodwill,and study of the market situation of culture and education industry from multiple perspectives.Secondly,by describing the process and results of the acquisition of Qtone Education,it lays a foundation for the following analysis.Thirdly,this paper analyzes the impairment of goodwill and the fulfillment of performance commitments in high premium M&A,and puts emphasis on the combination of M&A activities,shareholder behavior as well as changes in the company's financial data to analyze the real motivation behind the company's high premium M&A.Based on the above analysis,this article believes that Qtone Education's high premium M&A is not only for the company's development strategy,but also for the major shareholders' own interests.They blindly searched for M&A targets and through mergers and acquisitions to form hot topic so as to raise stock prices,with low-cost private placement and reduction of their exposure to earn profits.Then,with major shareholders cashing out at a high price,they lack the motivation to integration of the M&A targets at a later stage,and all business segments of the company show an obvious downward trend,with weak synergistic effect.Finally,based on the previous analysis,risk countermeasures are proposed from the three levels of enterprises,small investors and regulators.For enterprises,they should reasonably choose the M&A targets and take appropriate methods for asset evaluation before the merger,actively integrate after the merger,and give full play to the supervision function of independent directors and internal control system,so as to prevent the phenomenon of encroachment on the interests of the company.For medium and small investors,this paper suggests that they should view all kinds of information in the market objectively and dispassionately,improve their professional knowledge and make rational investment decisions.Regulators should also give full play to their role in guiding and supervising the market,as well as improve China's regulatory system,information reporting and disclosure system,raise the cost of breaking the laws,and ensure the fairness and stability of the capital market.Scholars have made comprehensive studies on the M&A activities of enterprises from the perspective of theories and cases.However,the number of researches on the emergence of high premium M&A and the outbreak of goodwill impairment risk in China in recent years,especially the emerging education service industry,still needs to be improved.This paper hopes that through the study of this case,it can reasonably link the high premium M&A with the behavior of shareholders,so as to make the analysis of this paper more powerful and the relevant conclusions more convincing.Of course,there are still some shortcomings in this paper,such as the failure to make specific analysis of the relevant performance after the merger,the lack of representativeness of cases,and the lack of more powerful evidence for some analyses relying only on external information.I hope that through continuous learning and thinking in the future,I can analyze and compare many typical cases of the capital market more thoroughly,strengthen my understanding of relevant accounting standards,and conduct more in-depth and thorough theoretical research on the motivation of high premium M&A.