Research On The Effect Of Bet Agreement On Goodwill Impairment In M&A

With the continuous development of China’s economy and the continuous improvement of the capital market,M & A transactions between enterprises have become more frequent.The business environment is changing rapidly.Compared with the physical enterprises with a large proportion of capital and more capital required for operation,companies in the asset-light industry have begun to show market advantages such as strong core competitiveness and high brand value,and have become the prey for the merger and acquisition of many physical enterprises.However,cross-border mergers and acquisitions exacerbate the risk of information asymmetry and integration in mergers and acquisitions.At the same time,the income method in the valuation of the asset-light industry is still in the ascendant in mergers and acquisitions valuation.According to the latest accounting standards,listed companies should conduct an impairment test on the asset group or asset group portfolio of the goodwill at the end of each year.If the goodwill impairment standards are met,the goodwill impairment should be accrued,and once the goodwill is impaired Period cannot be reversed.In order to reduce the risk of information asymmetry and the risk of goodwill impairment in mergers and acquisitions,gambling agreements that used to protect investors’ interests have begun to be used in mergers and acquisitions.The LED industry can be called a typical industry in the heavy industry,but because of too many enterprises joining and the market has become saturated,it has already been a red sea.In order to improve profit margins and seek transformation and upgrading,cross-border mergers and acquisitions of downstream media and online marketing companies are one of their outlets.This article selects Shenzhen Lianjian Photoelectric Co.,Ltd.(hereinafter collectively referred to as "Lianjian Photoelectric")to cross-border merger and acquisition of Shenzhen Lima Network Technology Co.,Ltd.(hereinafter collectively referred to as "Lima Networks")as a case study.First,the research background and significance At the same time,it reviews and sorts out relevant theories on the selection of M & A valuation methods,goodwill and goodwill impairment,and gambling agreements;secondly,it describes in detail the background and process of M & A’s merger and acquisition of Lima Networks;From the perspective of the scheme design of the gambling agreement and the factors affecting the impairment of goodwill,the reasons for the failed gambling agreement are analyzed in detail.Finally,the following conclusions are drawn based on the case:1.The merger and acquisition ended in failure.Lianjian Photoelectric made a substantial impairment of goodwill because of the failure of the subsidiary’s performance,which had a severe impact on listed companies.2.The content of the gambling agreement designed at the time of merger and acquisition is not inconsistent with its motive.The agreement designs performance indicators that the target company should complete,penalties for the target company’s failure to complete the performance indicator,and incentive measures for the target company to complete the performance indicator.3.The reason why the listed company accrued a substantial amount of goodwill impairment this time is due to the invalid supervision of performance on the gambling agreement and the lack of integration after the merger.In the end,through layer-by-case analysis of the case and combined with the summary analysis of other similar cases in the capital market,from the pre-M & A,M & A,and post-M & A to enterprises to prevent such factors from appearing in the future,the company did not complete the performance indicators and a large amount of Recommendations for the risk of goodwill impairment.