Research On The Problems And Countermeasures Of Goodwill Impairment Of Red Phase Under The High Premium Merger And Acquisition

As market competition becomes increasingly fierce,the idea of relying solely on their own development to achieve scale expansion and strategic transformation is no longer able to keep up with the development speed of the market economy,and M&A has become a preferred way to enhance the competitiveness of listed enterprises and optimize resource allocation.With the increasing number of M&A transactions,the scale of goodwill of listed companies in the A-share market has grown rapidly.However,the high growth of goodwill and the high total amount of goodwill also lurk the crisis of goodwill impairment.In recent years,goodwill "explosion" have been frequent in the A-share market,and listed companies have taken huge goodwill impairment charges in a short period of time,which will not only affect their own operations、share price and shareholders’ equity,but also cause a huge impact on the capital market.Based on the above background,this paper selects Red Phase as the research object,adopts the literature research method to categorize and summarize the literature related to premium M&A and goodwill impairment,and conducts a case study on the goodwill impairment problem caused by Red Phase’s M&A of Yinchuan Wolong based on synergy effect theory,information asymmetry theory,overconfidence theory and signaling theory.This paper firstly reviews the specific situation of M&A and finds that its M&A premium is as high as 192% and there is the problem of over-valuation,mainly because of the performance promise and the competitive advantage of the acquired party;secondly,it identifies the goodwill recognition and impairment situation,from the initial high recognition amount,defective subsequent treatment of goodwill,the existence of surplus management motive,unsatisfactory synergistic effect,overconfidence of management and changes in market environment The reasons for the problems of goodwill impairment in M&A are analyzed in six aspects,followed by an analysis of the impact of goodwill impairment on enterprises from three aspects: financial performance,share price and shareholders.Finally,based on the above analysis,we propose countermeasures to optimize the initial measurement and subsequent treatment of goodwill,strengthen internal management and actively respond to environmental changes for Redphase.The analysis of the M&A case of Red Phase in this paper not only enriches the study of goodwill impairment,but also helps companies to standardize their M&A behavior and prevent the risk of huge goodwill impairment,and provides a reference for companies in the same industry or with similar problems.