A Case Study Of The Merger And Acquisition Goodwill Of RAPOO Technology

Merger and acquisition usually produce “goodwill”,which is the most difficult to identify and difficult to deal with.Especially in the culture media industry,it is easy to produce high goodwill during the merger and acquisition because the core assets are mainly soft assets.In recent years,the number of high goodwill enterprises has increased significantly.Some enterprises failed to fulfill their performance commitments during the commitment period,resulting in a high loss of goodwill,while more businesses still had hidden dangers of high goodwill.What are the reasons behind the formation of high goodwill,and what impact and consequences will have on the stakeholders? It is one of the hot issues that both the accounting information provider and the use parties are concerned.This paper analyzes the mobile game companies in the cultural media industry.Taking RAPOO technology's merger and acquisition as an example,we study the causes,the consequences,the sources and precautionary measures of goodwill impairment.It is found that the direct cause of high goodwill in acquisition is the high premium of acquisition.Due to the high premium acquisition is RAPOO technology has a strong motivation to contribute to the success of the merger,in addition by the characteristics of the industry,the market reaction,the valuation methods and the impact of mergers and acquisitions both sides may exist transfer of benefits and other factors,and ultimately the formation of a high premium.In the short term market reaction,the high premium merger and acquisition has a positive effect on the stock price,while the negative effect of the high goodwill impairment is transient and weak;In the long-term financial performance,it has varying degrees of influence on the volatility of financial performance indicators.The impact of non-financial performance is mainly on management,after high premium on the acquisition there is a huge integration project,the performance pressure caused by impairment affects their daily decision-making;high premium on the acquisition of RAPOO technology makes the short-term performance is good,but the huge buried goodwill impairment bomb eventually bear small investors.The risk of goodwill impairment mainly comes from the factors that affect the future profitability of the company.The risk of RAPOO's goodwill impairment mainly comes from the industrial structure of the underlying enterprises.The main factors that influence the profitability of the future are the characteristics of mobile products,the characteristics of the mobile gaming industry and management after the merger.The methods to prevent the risk of impairment are as follows: step by step to pay the price,Payment in instalments,Performance commitment and so on.The study found that these methods are effective,but did not completely prevent the risk,such as litigation risk which directly resulting in the future profitability of enterprises to reduce the value of goodwill.Therefore,this paper gives some suggestions from the perspective of enterprise and put forward some views on the current goodwill treatment.Enterprises should make full investigations before merging and merge with their own strategic benchmarks,improve the accuracy of valuation when taking merger and acquisition,and when designing the means to prevent the risk of impairment,we should also take precautions in the early stage,in addition to taking precautions after the event.We should anticipate the development of merging targets and be prepared in advance.There is still room for improvement in the accounting standards for goodwill treatment.This paper suggests that accounting standards can allow for the refinement of merged goodwill,and enterprises can selectively reduce the value.