The Application Risks And Preventive Measures Of Valuation Adjustment Mechanism In Mergers And Acquisitions

The 12 th Five-Year Plan has significantly adjusted China’s economic structure and encouraged the film and television industry with national policies,ushering in a golden period.Subsequently,the country promoted supply-side reform and the form of merger and acquisition surfaced in the capital market.Especially in the film and television industry,the M&As emerge one after another.However,due to the particularity of media and culture industry,there are serious inaccurate valuations in the M&As.The proposal of the Valuation Adjustment Mechanism can effectively protect economic interests of both parties in the M&A,appropriately reduce uncertain risks,and have the opportunity to adjust the valuation in the future.However,in recent years,many enterprises blindly use the tool of VAM,only considering the short-term interests,so that the VAM loses its effective effect,resulting in the decline of performance after the M&A,which seriously affects the development of the film and television industry.Based on the background of film and television industry,this paper adopts the research on the financial risk theory of M&A,Huayi Brothers as the leading enterprise in film and television industryt,can reflect the most typical features of the film and television industry.It is concluded that the application of the VAM in the M&A process brings Huayi Brothers risks of value assessment,financing and payment,debt repayment,goodwill impairment and asset integration.Furthermore,it highlights a series of common risks in M&A of China’s film and television industry,and puts forward complete risk prevention measures for the above five risks generated in three stages of M&A.The innovative significance of this paper lies in the exploration of the issues related to the VAM in the hot cases,and involves the hot topics such as goodwill impairment,making the preventive suggestions put forward more forward-looking and implementable.The research contribution of this paper is to provide help for stakeholders to understand the connotation of the VAM deeply,and provides experience and inspiration when signing the VAM regulations,so as to provide effective reference for other enterprises in the film and television industry to rationally sign the VAM and reasonably avoid risks when implementing the same type of M&As.