Analysis On Cultural Enterprises’ M&A Premium

In recent years, the development of cultural industry in China has entered a golden period. Wherein, Internet and mobile game industry has had a wide market with the rapid development of mobile Internet. In 2014, there were a series of merger and reorganization cases occurred in Internet and mobile game industry. And these mergers had a "high premium" features.This paper selects the case of Chinese Media merged Elex for case study. By analyzing this case, we expect to explore the causes of forming high merger premium and then explore business valuation and pricing issues behind high merger premium.This paper will study high premium in the following four perspectives:From the analysis on accounting confirmation of self-generated goodwill, this paper focuses on the effect of modern business reputation accounting confirmation requirements on the quality of financial information. From the analysis on asset appraisal level, this paper focuses on intangible resources other than statements, namely, what is self-generated goodwill, how it carries out the evaluation of assets, what are the characters of above-mentioned "light asset" operation companies when evaluated, and what are the reasons that are related to appraisal value. From the analysis on merger synergy effect level, this paper focuses on the reasons that Chinese Media merged Elex, and the consequence to Chinese Media after the merger, by analyzing both sections of financial and operating synergy effect. From the analysis in risk management angle, this paper focuses on how Chinese Media used corresponding risk management to reduce the risk of merger premium, which includes bet against performance and work integration after merger.This paper uses case study method, starts from the internal between acquiring firm and acquired firm, consults and collects relevant information and references, deeply analyzes data and information, and through literature and theoretical guidance, deeply studies the reasons why high premium was generated when Chinese Media merged Elex, and summarizes the reasons why high premium is easy to be generated in cultural industry. This paper comprehensively studies the reasons why high premium is generated on accounting confirmation of self-generated goodwill level and asset appraisal level. This paper deeply discusses the issue of asset appraisal and pricing in company mergers and acquisitions by analyzing the reason of premium and after that, finds efficient processing recommendations.