Research On Preventing The Risk Of Goodwill Impairment In Mergers And Acquisitions By VAM Agreements

In the context of the new normal of economic development,more and more listed companies have completed business transformation and formed economies of scale through mergers and acquisitions.With the continuous development of Internet technology,China’s economic restructuring is accelerating.Asset light enterprises are favored in the M&A market due to their strong operational flexibility,high added value,and low investment in assets.However,their characteristics also trigger the generation of high premiums,resulting in the formation of high goodwill due to paying high premiums during mergers and acquisitions by listed companies,resulting in goodwill impairment risks.In order to avoid the huge goodwill impairment caused by premium mergers and acquisitions from swallowing up the net profit of enterprises and affecting their long-term development,many enterprises choose to introduce wager agreements during mergers and acquisitions.However,with the increasing use of VAM agreements in mergers and acquisitions,how to reasonably design the terms of VAM agreements and effectively avoid the risk of goodwill impairment in mergers and acquisitions has become a key issue in the academic community.Based on a review of relevant literature,it is found that gambling failures frequently occur in domestic M&A cases.If the bet is not successful,listed companies are likely to face goodwill impairment,which will have a negative impact on their business development.Therefore,based on the application of VAM,this article conducts research on the prevention of goodwill impairment risk in premium mergers and acquisitions,which has practical significance for the healthy development of the domestic capital market.In order to study how to scientifically design VAM agreements and effectively prevent goodwill impairment risks in M&A transactions,this article selects the case of mergers and acquisitions between Blue Focus and Bojie Advertising,discusses the effectiveness and shortcomings of goodwill impairment risk prevention based on the application of VAM agreements,and puts forward relevant suggestions,with a view to providing reference for gambling M&A activities in the capital market and helping both parties achieve win-win results.This article uses the literature research method,case study method,and event study method to study the issue of preventing goodwill impairment risk in VAM agreements.The article first introduces the research background,and then points out the significance of this study;Then,the relevant literature in the fields of merger premium,goodwill impairment,and risk management of bet agreements is summarized as the basis for case analysis.After introducing the basic situation of the case,this article focuses on the effect of using the blue cursor to prevent the risk of goodwill impairment,as well as the reasons for its failure to sign a VAM agreement to prevent the risk of goodwill impairment.This article first analyzes the reasons for goodwill impairment risk from both valuation methods and performance realization;Secondly,through the event study method and ratio analysis method,this paper analyzes the effectiveness of VAM in preventing goodwill impairment risk,and evaluates it;Thirdly,it analyzes the reasons for the failure of the VAM agreement to prevent goodwill impairment risk from three stages:before signing,during execution,and after signing.On this basis,combined with the particularity of this case,the following suggestions are proposed for listed companies preparing to sign a VAM agreement in mergers and acquisitions to prevent the risk of goodwill impairment:(1)scientifically set performance commitment indicators before signing a VAM agreement,and add contingent payment mechanisms;(2)Adopt diversified inspection indicators and appropriately supplement exemption clauses in the implementation of VAM agreements;(3)Strengthen the supervision of the target company after the signing of the VAM agreement,and reasonably restrict the equity pledge behavior.