Research On The Risk And Prevention Of M&A Against Gambling

China's economic development is currently in a complicated stage of structural transformation.In order to quickly integrate resources,expand business scale,actively respond to the government's call,and respond to various difficult challenges,mergers and acquisitions have become an important choice for companies to respond to risks and opportunities.According to the latest policy,the government will make full efforts to promote the structural reform of the M & A market,aiming at administrative review of the financial tax market mechanism and other aspects to reform,improve the market M & A system,encourage enterprises to carry out M & A and reorganization activities,and support policy,Promote the industry integration,transformation and upgrading of listed companies in order to give full play to the functions of the capital market to promote the flow of resources and optimize the allocation,and to overcome the current painful period of economic transformation.As a result,M & A and restructuring have a fairly loose external environment,and policy encouragement has allowed the relevant departments to relax their control.Listed companies can not only expand the scale through M & A transactions and enhance the company 's overall value,but also have the opportunity to use the current hot market in capital The market seeks additional benefits,and the willingness of companies to carry out mergers and acquisitions has become unprecedentedly strong,which immediately triggered a new wave of mergers and acquisitions of listed companies.However,behind the upsurge of mergers and acquisitions,the issue of goodwill impairment caused by M & A gambling has also become more serious.The gambling agreement is the contract design of the merger and acquisition parties at the time of the merger.The contract predicts the operation of the merged party in a certain period in the future,and compensates the merged party or rewards the merged party depending on whether the agreed performance commitment is reached.As a valuation adjustment mechanism,the gambling agreement temporarily mitigates the risk of information asymmetry of the merged party before the merger and acquisition before the merger.To a certain extent,the interests of the buyer are guaranteed,and the profitability of the subsidiary is also tested.However,under the current agreement mechanism,the use of single financial indicators such as net profit that is easy to manipulate as a condition of performance has led to the subsidiary's performance in the gambling period.Indicators,quick success and immediate benefits,the pursuit of short-term good performance and ignore the long-term interests of the company,or artificially compile profits,thereby affecting the results of gambling.After the completion of the merger and acquisition,the buyer's binding force on the seller began to weaken,and the control of the management right was separated.These problems left a lot of gray areas,which derived the moral hazard between the subsequent buyers and sellers,and the mutual game for the self-interest of the merger and acquisition parties intensified.Eventually led to the failure of gambling.From the perspective of the respective motives of the two parties,this article makes a detailed and detailed analysis of the case of Oriental Seiko M & A Pride,discusses the issue of M & A agreement on gambling under the current market mechanism,and then focuses on how to prevent and control the risk of M & A To reduce the failure of gambling similar to M & A.Regarding the problems in M & A and gambling,put forward relevant suggestions for risk prevention and control: Use the gambling agreement cautiously.Before signing the gambling agreement,the company must have a sense of risk.Both parties of the merger and acquisition should be rational and objective in the valuation of the transaction.The gambling agreement has both a doubleedged sword attribute of high risk and high profit.Carefully consider its own financial capabilities,industry characteristics and business objectives,whether it is suitable to implement M & A by gambling;the Earn-out payment method is used in transactions to increase duplication The game structure balances the power and risk of the merger and the acquiree before and after the merger,prompts the merger and acquisition parties to set reasonable conditions and targets for gambling,choose appropriate compensation payment methods,reduce premium valuation,and reduce the risk of goodwill impairment.Set a diversified benchmark target to prevent the occurrence of profits from related party transactions in the case and generate accounting disputes;focus on the integration work in the later stages of the merger and acquisition,clear the authority arrangements in advance and supervise post-delivery,and resolve the control operation after the merger and acquisition The principal-agent problem arising from the separation of powers encourages the management to manage the company in a multi-dimensional and multi-directional manner,successfully achieving the performance-to-betting goals,and achieving a win-win situation for both parties.