Discussion On The Impact Of M & Amp; A Goodwill Measurement On Enterprise Value

In recent years with the development needs of listed companies M&A events have gradually increased and the M&A goodwill generated in the process of M&A has also gradually expanded.However with the increasing value of goodwill there are frequent cases of huge impairment of goodwill which seriously damage the enterprise value and shareholders’ interests.Therefore the initial and subsequent measurement of goodwill has always been a topic of concern and discussion in the industry.There are many ways to measure goodwill and different measurement methods have different effects on the enterprise value.By analyzing the impact of different measurement methods of M&A goodwill on the enterprise value we can explore a more reasonable way to measure goodwill.This paper chooses Jincai Internet Corporation as the research object hoping to provide reference and suggestions for the measurement of goodwill in mergers and acquisitions of companies in the same industry.This paper uses different goodwill measurement methods to evaluate the enterprise value of Jincai Internet to study the impact of goodwill measurement methods on enterprise value.First of all through reading and sorting out the relevant literature on enterprise M&A and goodwill this paper summarizes the relevant theories of M&A goodwill and uses the method of case analysis to study and analyze the case of the acquisition of Fangxin Technology by Jincai Internet which resulted in high goodwill and describes the background and purpose of its M&A as well as the generation and value impairment of M&A goodwill.Finally as a measure of enterprise value the benefit EVA has analyzed and compared the impact of different initial and subsequent measurement methods on the enterprise value of Jincai Internet.Finally conclusions and suggestions are drawn as follows: First the initial measurement method of goodwill: the enterprise value of Jincai Internet calculated by the asset based method is higher than that calculated by the income method and the goodwill of M&A has a negative correlation with the enterprise value.It is believed that the initial measurement should follow the principle of prudence and try to improve the accuracy of valuation;Second the combination of systematic amortization method and impairment test method can not only mitigate the impact of impairment on the enterprise value but also the financial information is closer to the true value of the enterprise which can more accurately reflect the business situation of the enterprise and improve the accuracy and quality of financial information.Therefore this paper advocates the combination of systematic amortization and impairment test to conduct subsequent measurement of goodwill.