A Case Study Of Goodwill Impairment In Kaiyuan Education M&A

With the improvement and development of China's capital market,many listed companies have embarked on the road of M ? A.M ? A events have exploded,high premium M ? A is becoming more and more common,and the goodwill balance of listed companies has been maintained at more than trillion yuan.The existence of huge goodwill has become a mine that listed companies may be detonated at any time.In recent years,with the support of national policies,M ? A activities in the education industry have continued.Due to the generally high valuation of the education industry,the amount of goodwill formed by M ? A in the education industry is very huge.Cases of enterprises withdrawing huge goodwill losses in the education industry continue to emerge,which has had varying degrees of negative impact on the listed companies themselves,investors and capital markets.Therefore,it is very important to prevent the risk of goodwill impairment.Through the method of case study,this paper starts with the case analysis of Kaiyuan instrument's high premium acquisition of Hengqi education and the transformation of CUHK talents into the education industry.By analyzing the reasons and harm of Kaiyuan education's huge goodwill impairment,this paper finally draws a conclusion: in the case of Kaiyuan education's M ? a goodwill impairment,the management's decision-making mistakes lead to the excessive M ? a premium,resulting in huge goodwill,and then the risk of goodwill impairment;After the merger and acquisition,the profit quality is not high and the integration is not in place,which makes the goodwill impaired;The huge goodwill impairment accrued by Kaiyuan education will not only erode profits,increase debt costs and make the financial performance of Kaiyuan education poor,but also reduce the stability of Kaiyuan education stocks and cause a negative impact on Kaiyuan education stock market.From the standpoint of the acquirer,this paper puts forward some suggestions on the prevention of the impairment risk of M ? a goodwill: through the transformation of cross industry M ? A,enterprises need to carefully select the acquiree,carefully evaluate and reasonably judge the development status of the industry;To prevent the risk of goodwill impairment,we should do a good job in the integration after M ? A and reasonably withdraw the provision for goodwill impairment.It is hoped that the research of this paper can provide some references for goodwill risk prevention and cross industry M ? A in the education industry.