Research On The Formation And Impairment Of Goodwill In M&A

Nowadays,with the continuous globalization of economy,mergers and acquisitions initiated by enterprises in various countries are becoming more and more frequent both at home and abroad,and mergers and acquisitions of Chinese enterprises also show a trend of rapid growth.With the increasing number and amount of mergers and acquisitions,the amount of goodwill confirmed has also increased greatly.According to Wind data,by the end of Q3 2018,the net profit of the entire a-share market in the first three quarters was only close to 3.00 trillion yuan,while the total goodwill on its books was close to 1.50 trillion yuan,accounting for nearly 50.00% of the former.Once the collective impairment of listed companies on the market,such a huge amount of goodwill will not only cause violent fluctuations in the securities market,but also be harm the interests of investors.Therefore,the author decided to focus on the study of goodwill and its impairment,and selected typical cases for analysis and summary,hoping to find out the factors of high M&A goodwill,as well as the existing problems of goodwill impairment and the reasons behind.This paper mainly adopts the combination of literature research method and case study method for research design,and analyzes the goodwill formed in the merger and acquisition.Firstly,on the basis of literature review of the nature of goodwill and the bet agreement,the paper summarizes the theoretical basis.Secondly,the author makes a statistical analysis of the overall situation and causes of the impairment of goodwill in China's capital market,and concludes that the total amount of goodwill in the market is huge,there are structural problems and impairment risks,and makes a simple analysis of the overall formation of goodwill in the industry.Thirdly,this paper selects KINGSUN SHARE,which are paid attention to by Shenzhen stock exchange due to huge goodwill impairment,as the case study object,and analyzes the forming factors of the huge goodwill formed by the acquisition of longwing education by KINGSUN SHARE: this is mainly due to the target industry characteristics,the enterprise operating and bet against abuse of the agreement in acquisition,and then analyze the case company's goodwill get its existing problems,and analysis of the problem is the reason behind the acquired party fails to complete performance commitment,mergers and acquisitions may exist the motives of earnings management,mergers and acquisitions valuation also overestimate may exist,then the case summary,inspired in enterprises should be adequate due diligence in M&A,prudent use of performance;Finally,Suggestions are made on how regulators,enterprises and third-party investment institutions should make joint efforts to solve the huge goodwill and impairment.