Research On The Formation And Subsequent Treatment Of Huayi Brothers' Goodwill In Mergers And Acquisition

In recent years,with the deepening of China’s socialist market development system reform,many Chinese listed companies have been constantly seeking new growth and improvement.Domestic merger and reorganization of the number of companies has always maintained a growing trend,its acquisition amount is also rising substantially.Among them,the merger and acquisition activities in culture and media industry,which take asset light as the main value of the company,are also very active.Up to now,the vast majority of cultural media enterprises expand their profit models and means as soon as possible in order to bind resources to achieve integration effect.In addition,the acquirer will promise a high performance commitment,so the acquirer is very willing to pay a high price to acquire the other party at the time of merger.However,as the identifiable net assets of the acquired companies in the culture and media industry are generally low,large goodwill will be recognized when they are purchased at a high premium.However,China adopts the goodwill impairment test method to carry out the follow-up measurement of goodwill.If the company does not properly carry out the impairment test of high goodwill in the later period,it will produce great risks and hidden dangers.Starting from the whole acquisition process of Huayi Brothers,a leading enterprise in China’s cultural media industry,and its subsequent treatment of goodwill,this paper makes a detailed analysis of the whole process of Huayi Brothers’ acquisition of Yinhan Technology,Dongyang Haomin,Dongyang Meila,Zhejiang Changsheng and Huayuxun Technology.It also makes statistical collation of each acquired company’s situation,acquisition situation,performance commitment situation,initial and follow-up treatment of goodwill and so on.In view of these companies,the basis of huayi Brothers’ initial measurement and subsequent measurement is analyzed.Then it compares the difference of financial data between the amortization method and the impairment method of Huayi Brothers,and the impact of the provision for large impairment of goodwill on the share price of Huayi Brothers.It also analyzes the short-term performance of Huayi Brothers after the impairment of goodwill by the event study method.Secondly,it analyzes the problems of the high premium goodwill generated during the acquisition of Huayi Brothers and the unreasonable provision of impairment in the subsequent processing of goodwill.Finally,based on the above analysis,corresponding suggestions are put forward for regulatory agencies,companies themselves and standards.This paper is expected to provide some reference for major M&A events of various enterprises in the future,and also provide targeted regulatory suggestions and references for the relevant government supervision under the background of the continuous explosion of large-scale goodwill in China’s capital market from 2018 to now.