Case Analysis On Ourpalm's VAM Application In Mergers And Acquisitions

As the market competition tends to be increasingly severe,enterprises are no longer simply satisfied with relying solely on their own strength development,but actively use external factors such as merger,acquisition and reorganization to expand the scale of the enterprise,improve their market competitiveness,and promote the healthy and stable development of enterprises.As one kind of capital games,mergers and acquisitions are characterized by high risk,information asymmetry and so on.Therefore,risk management tools of merger and acquisition such as valuation adjustment mechanism has been emerged.Since 2003,valuation adjustment mechanism has been using and expanding the range of application in China.Valuation adjustment mechanism has been most widely used in Private Equity and Merger & Acquisition.In the fact that the demand for valuation adjustment mechanism is constantly expanding,identifying the advantages and disadvantages of VAM,making full use of its good side,and responding to the potential risk by continuously optimizing the design of VAM,are ways to make great significance for the effective use of VAM.Meanwhile,the effective use of VAM provides strong guarantee for enterprise merger and acquisition activity,further developing and perfecting the capital market in our country.At present,the game industry has been well developing in China.As a new industry,the game industry has been attracting more and more attention from listed companies due to its characteristics of huge growing space and strength of creativity.Also,game companies have been considered as the primary investment projects.In this paper,game enterprise,Ourpalm,is selected as the research subject,and the case analysis of the application of VAM by Ourpalm is based on their three mergers and acquisitions activities after Ourpalm went public.First of all,author organized the knowledge of the related documents and theories involved VAM,and summarized the potential risk which enterprises might face to when they apply VAM in their merger and acquisition activities,and these aimed to provide the corresponding theoretical support for the following analysis.Then the case study was introduced in aspects of the background of Ourpalm and those three companies merged and acquired by Ourpalm,and how VAM applied in these three activities.Next,author analyzed how Ourpalm responded to potential risks in the design of VAM they applied,and also deeply analyzed the reason of the difference between the applications of VAM in those three companies from the performance promise,reward consideration and compensation scheme three different angles.Moreover,Ourpalm's profitability indexes during the time of merger and acquisition activities were used to explore whether Ourpalm really lower down the potential risk by applied VAM,and whether they achieved the purpose of using VAM in their merger and acquisition activities,also,the reasons why the three companies have different results of application of VAM by using the similar design of it.Finally,author concluded the advantages of application of VAM by Ourpalm.At the same time,author pointed out the problems in the practical application process after the profound thinking,and integrated some enlightenment based on all of above analysis,in order to provide a reference value for the later research.