M&A Financialization & Goodwill Impairment Risk

Under the new normal of economy,M & A has become an important way for enterprises to transform and upgrade and seek strategic layout.Relevant data shows that financial technology-based enterprises have sprung up in the wave of M & A in recent years,and become the target of listed companies.In terms of industry,with the rapid development of mobile Internet and the popularization of intelligent devices,the financial technology industry is in the stage of rapid development,with huge market potential;in terms of enterprises,financial enterprises generally have the characteristics of high profit margin and strong profitability.There are two reasons for the boom of M & A of financial enterprises in the capital market,driving the premium level to rise continuously,thus affecting the valuation and recognition of goodwill.Due to financial enterprises generally have the characteristics of "light assets",they mainly rely on intangible assets such as customer relationship,special qualification and patent technology.The profit level of financial assets is closely related to the trend of macroeconomic development and the ability of enterprise risk management.Similarly,the value of goodwill has a pro cyclical effect on the basis of fair value measurement.The pro cyclical effect of goodwill refers to that goodwill can expand the asset scale of an enterprise and boost the development of an enterprise when the operation of the enterprise is getting better;however,when the operation of an enterprise deteriorates,goodwill will face the risk of impairment,further reducing the originally reduced profits of the enterprise and increasing the volatility of the operation of the enterprise.In other words,for Financialization,the goodwill premium of M & A in the up stage of macro-economy may bring high impairment risk in the down stage of economy.Therefore,the M & a goodwill of financial enterprises has significant Pro cyclical benefits,and the risk of impairment in a special period increases the volatility of business operation.In this case study,it is found that in the macroeconomic environment,the excessive valuation and payment of consideration in M & A transactions generate M & a premium,which is directly transmitted to goodwill.Under the influence of the uncertain factors of future operation,when the industry is in recession or the enterprise is in poor operation,the goodwill generated by premium M & A will turn into the risk of impairment due to the failure to realize the expected earnings before M & A,which will lead to a "big drop" in the profits after M & A.This paper tries to explore the improvement of valuation and goodwill accounting from the aspects of M & a motivation,financial M & A integration and gambling agreement.In view of this,it is proposed to use case study method to analyze the impairment of Goodwill under the mode of financial M & A.First of all,it introduces the research background and puts forward the research questions,and then puts forward the research significance and innovation.Then it summarizes the research results and theoretical basis of domestic and foreign scholars on merger and Acquisition Premium,gambling agreement and goodwill accounting treatment,which lays the foundation for case analysis.After introducing the general situation of the case,this paper focuses on the analysis of the impairment of the goodwill of the case company.Finally,combined with the characteristics of fintech companies,it puts forward suggestions from the perspectives of M & a valuation,gambling agreement,integration efficiency and subsequent measurement of goodwill.