Analysis On Cultural Enterprises' M&A Premium

The 19 th CPC National Congress gives the opinion that we have to strengthen cultural confidence and promote the prosperity of socialist culture.The future of cultural industry is quite bright.In recent years,the cultural industry has flourished and has been making great efforts in the capital market.A series of cases of mergers and acquisitions with high premium have gained the attention of the market.By analyzing the selected case,this paper gives several causes of high premium in cultural industry's M&A and collates feasible developing experience to lay a solid theoretical foundation for the M&A of cultural industry.As the enterprise with “light assets”,cultural industry is quite different from the general enterprise which has “heavy assets” in the M&A.The difference is mainly reflected in the valuation and pricing of the underlying assets.This paper hopes to summarize the main characteristics of valuation and pricing of such industry,so as to provide a basis for M&A in the cultural industry.This paper uses the method of case analysis,taking the case of the M&A of H company in 2014 as an example.It focuses on analyzing the causes of the high premium and explores the difficulties of the valuation and pricing of this kind of companies.This paper stands on the views of the accounting recognition of goodwill,asset evaluation,synergy effect of M&A and risk control.The conclusions are as follows:(1)The recognition requirements of modern goodwill accounting are not perfect and the quality of financial information is affected to a certain extent;(2)For lacking the unified standard for evaluating the intangible resources which are outside the financial statements,it is easy to produce high value added using the existing methods of asset evaluation;(3)The enterprise is willing to pay high merger premium for the expected synergy effect;(4)As a common risk control tool,gambling agreement should be used carefully for its practical effect is not sure.Taking this case as an example,the gambling agreement actually has little effect.The compensation does not make up for the loss of the listed company at all when the M&A enterprise has a huge loss.This paper analyzes and discusses the motives,benefits and risks of the M&A.At the same time,it analyzes the causes of the high premium,sums up the rules of the industry,and puts forward the corresponding suggestions.