Research On Risk And Prevention Of Merger And Acquisition On VAM

With the growth of the number of Internet users and the popularity of the Internet,the Internet has had a huge impact on people’s lives,and the way people shop,pay and entertain has also changed.With the continuous development of Internet companies,users have an increasing demand for network content,and more and more attention is paid to the acquisition and quality of information.The Internet has begun to develop in a diversified direction.However,the speed of innovation of Internet products is very fast,and many powerful companies often choose to conduct mergers and acquisitions to expand their own advantages,integrate upstream,midstream and downstream resources in the market,and achieve synergy.In order to protect their own interests,the parties to the merger and acquisition have launched a valuation adjustment tool called a gambling agreement out adjustment.In the process of mergers and acquisitions VAM,the risks are relatively significant.On the basis of summarizing and sorting out relevant data,this paper selects the case of China Literature ’s acquisition of New Classics Media,identifies its possible gambling risks,and gives corresponding prevention and control suggestions.First,the article clarifies the background and significance of the topic selection,and defines the concepts and theories related to corporate mergers and acquisitions,gambling agreements,performance commitments,etc.,the process of merger and acquisition execution,the main content and completion of the VAM agreement,etc.are discussed;then,the merger and acquisition of China Literature is further analyzed from the three stages of merger and acquisition: before the signing of the VAM agreement,during the implementation,and after the revision.The risk of gambling;finally,the corresponding suggestions for risk prevention and control are given according to the existing risks: First,before signing the gambling agreement,China Literature should conduct a comprehensive investigation of New Classics Media and choose a reasonable value.The evaluation method can effectively control the valuation risk in mergers and acquisitions.It is also necessary to establish reasonable and flexible gambling clauses according to the overall industry status of New Classics Media and the actual situation of the company,so that the risk of setting the gambling terms in mergers and acquisitions can be obtained.Effective control;secondly,in the process of fulfilling the VAM agreement,China Literature should adopt appropriate financing and payment methods,and expand financing channels,so that financing payment risks in mergers and acquisitions can be effectively controlled,and it is also necessary to pay attention to the operating conditions of New Classics Media,to disclose the completion of performance commitments in a timely manner to prevent risks in operation and risks caused by failure to meet performance commitments;third,after the revision of the VAM agreement,China Literature needs to establish risk awareness and agree to negotiate in the VAM agreement.To prevent the risk of goodwill impairment,we should also deepen the communication and cooperation with New Classics Media to prevent the integration risk after the merger.The VAM agreement has significant advantages,and reasonable utilization can promote a win-win situation for both parties in the M&A transaction.In recent years,as my country’s capital market has become more prosperous,more and more companies have chosen to seek new development through mergers and acquisitions.However,there are very few cases of successful VAM in my country,and there are many cases of equity repurchase and compensation due to failure of VAM in the end.Mergers and acquisitions VAM transactions have great risks,and it is particularly important to establish a sound risk prevention and control system.Especially when Internet companies conduct mergers and acquisitions,due to the uniqueness of Internet companies,companies should adopt a prudent and objective attitude when using gambling agreements.In the case selected in this article,due to the high premium mergers and acquisitions of China Literature,it bears a heavy financial burden and huge merger risks.Therefore,China Literature should comprehensively consider various factors in mergers and acquisitions,and make reasonable use of gambling agreements.Prevent risks and build a sound risk prevention and control system,so that Internet companies can learn from their mergers and acquisitions in the future.