The Analyze Of The VAM On M&A Case

Mergers and acquisitions are the most important part of modern investment banks in addition to securities underwriting and economic operations. In the new normal economic background, more and more Chinese companies aim to realize their strategically transformation by mergers and reorganizations. For investors, the level of understanding of the acquired company far less than their own managers. To solve the problem of information asymmetry caused by bad investments, acquiring party and M & A side often by signing an agreement on gambling to avoid both risks.Firstly, domestic and foreign scholars regarding to mergers and reorganizations and agreements related gambling literature summarized. Secondly, methods like accounting research as well as event study will be applied to analyze the performance of M & A situation Jinli M&A Yuhan, analysis of the case in setting performance compensation agreement on gambling when the subject of rationality. On this basis, the reasons for the failure of gambling analyze and suggest improvements.Jinli M&A Yuhan failure showed that:First, to improve the operating margin depends not only on the viability of the enterprise, but also by the impact of external economic environment. In the context of economic globalization, changes in the macroeconomic environment for the high-tech industry's influence is growing. The biggest reason Jinli M&A Yuhan for failure is that the business model is more a single photoelectric? too dependent on a single vendor, after Apple Inc replaces the screen supplier, the viability is severely damaged. Second, the growth of corporate sales growth is often accompanied by rapid expansion, but after expansion, tend to usher in a temporary slump. Listed companies in the M & A growth enterprises can not only see the front of extraordinary growth, but also to predict whether the fast-growing support behind the actual results is strong and if there will be a larger pullback. Third, the agreement on gambling itself is a valuation adjustment protocol, it is the product of investment and financing of both games. Investors must wonder whether that the risks will be able to entirely avoid with the signing of the agreement on gambling.Because it will be failed in the absence of market liquidity, investors will be involved in short-term strategy into a long-term equity holdings, which itself does not have the appropriate ability of business operations of investors in terms of a long-term burden. For the financing side is concerned, during the time of the valuation of the enterprise, to ensure that the emergence of the idea of blind optimism, not because of temporary difficulties, resulting in the loss of control over the final enterprises, on balance, to avoid subsequent unnecessary disputes.