Research On Risk Identification And Prevention Of Xing Fa Group M&A Under The VAM

In recent years,China’s economy has developed rapidly and corporate mergers and acquisitions activities are increasing.Especially in the traditional industry,mergers and acquisitions have emerged with the strategic transformation of industry transformation.The complexity of the M&A transaction itself and the ubiquity of information asymmetry have led to high risk of various mergers and acquisitions.In order to adjust the needs of corporate valuation,the gambling agreement has been applied to trading activities by more and more enterprises to reduce the risk of mergers and acquisitions.However,the gambling agreement is not an absolutely ideal mechanism.Many companies have successfully applied the gambling agreement and achieved rapid development,but there are also many companies that fail to gambling agreements.On the basis of reducing the risk of common mergers and acquisitions,promoting the reasonable valuation of the target enterprises,and stimulating the management,the gambling agreement will also lead to the management’s irrational behavior due to the imbalance of the target setting,triggering new risks and impairing the interests of both parties.The success of the gambling agreement has a major impact on the management of M&A risks.This paper uses case analysis to analyze the M&A risk of Xingfa Group under the gambling agreement.The selected Xingfa Group case has certain characteristics: First,the Xingfa Group’s M&A valuation institution uses the more common income method in the capital market M&A activity to value the underlying assets and form a higher premium.Second,the gambling clause in the case is designed with net profit as the object of gambling.This financial indicator is applied more frequently in the gambling agreement.In the case study of this paper,the analysis of gambling motivation is first carried out.The risk identification framework is used to identify the strategic risks existing before the signing of the gambling agreement,the valuation risk and the target setting risk in the agreement implementation,and the risk and goodwill are integrated after the implementation of the agreement.Impairment risk;then analyze the risks under thegambling process one by one,and summarize the impact of the gambling agreement on the risk of mergers and acquisitions;finally,based on the above analysis,put forward the risk control and risk hedging measures for the M&A risks.Get the relevant enlightenment of the case and summarize the importance of reasonable valuation,rapid growth of performance,and risk control for gambling mergers and acquisitions.