Research On The Formation And Impairment Of Goodwill In Jiayun Technology M&A

With the continuous development of China’s market economy,M&A has become a common means for listed companies to seek further development.However,in recent years,the high premium M&A behavior of some enterprises in the M&A process has resulted in the accumulation of huge M&A goodwill in A stock market,which has aroused the attention of the academic circle.Because the high amount of goodwill accumulated by enterprises is likely to lead to some inestimable risks,such as goodwill impairment risk,unfinished performance commitment risk,etc.Although most of the current high-premium M&A deals are supplemented by performance commitment agreements as compensation for the investment risks of the acquirer.However,from practical experience,when the acquired party fails to fulfill the agreed performance commitment index,the compensation received by the acquirer is often insufficient to make up for the loss caused by the impairment of goodwill.Once an enterprise sets aside a large amount of impairment for the goodwill of M&A,it may lead to a precipitous decline in the profits of the enterprise,thus affecting the performance of the enterprise in the capital market and causing losses to shareholders.In this context,this thesis summarizes previous studies,first of all,the essence of M&A goodwill,goodwill formation and impairment related concepts and theoretical basis are elaborated and sorted out.Secondly,this thesis chooses the two huge goodwill impairment events after Jiayun technology’s high-premium acquisition of Jinyuan interactive,Yunspacetime and Weying Interactive as the case study object,and analyzes the formation of its huge goodwill acquisition and the reasons for the impairment.After analyzing the goodwill sources of Jiayun technology’s two goodwill impairments,this thesis argues that the goodwill of Jiayun’s two huge goodwill impairments mainly comes from its high-premium M&A of Jinyuan interactive,Yunspacetime and Weiying interactive in 2015.In terms of the measurement of subsequent goodwill impairment,the thesis focuses on the significant difference in the provision of goodwill impairment before and after the performance commitment period of Jiayun technology: that is,during the performance commitment period from 2015 to 2017,Jiayun technology did not provision for goodwill impairment,but in 2018,the first year after the performance commitment period,Jiayun technology made a huge provision for goodwill impairment.In 2020,Jiayun technology for the second time a huge goodwill impairment provision.Thirdly,this thesis believes that the problems in the goodwill impairment process of Jiayun technology’s acquisition mainly include: unreasonable high valuation of M&A,unreasonable outstanding performance commitments in 2017 but no provision for goodwill impairment,unreasonable provision for a huge amount of goodwill impairment in 2018,and "big bath" in 2020 through provision for a huge amount of goodwill impairment.In view of the above problems,this thesis carries out a detailed analysis based on multiple evidences and tries to find out the causes of these problems.Finally,this thesis puts forward some suggestions on how to improve the goodwill impairment system of M&A in China from the two directions of regulators and enterprises themselves.From the perspective of regulators,it is necessary to strengthen the supervision of M&A with high premium and high performance commitment,such as conducting an irregular review of enterprises with large goodwill,promulgation of detailed provisions on the practical operation of goodwill impairment criteria,and exploring the follow-up measurement method of goodwill combining amortization method and impairment test method.For the companies suspected of using goodwill impairment to conduct earnings management,regulators should also strengthen the punishment of executives and shareholders involved in earnings management,so as to maintain the order of the capital market.From the enterprise level,enterprises should prudently select acquisition objects and carry out rational valuation,sign performance commitment agreements with longer commitment periods,and hire asset evaluation teams with stronger professional competence to conduct annual goodwill impairment tests.All in all,this thesis attempts to analyze the case of withdrawing huge goodwill impairment twice after Jiayun technology’s high premium M&A,focus on analyzing the reasons for the huge goodwill impairment of listed companies,and explore the problems existing in the goodwill impairment test procedure in current practice,in order to provide suggestions conducive to improving the relevant system of M&A goodwill,so as to promote the further development and improvement of China’s capital market.