Research On Goodwill Of M&A In Game Industry

With the deepening of China’s economic market reform system and the improvement of the capital market,more and more enterprises begin to realize the strategic goal of transformation,upgrading and diversified development through M&A.The number of M&A in China’s capital market has risen rapidly,resulting in the frequent occurrence of huge goodwill and goodwill impairment problems.In the M&A boom,the game industry related enterprises has become a popular target because of the characteristics of high returns.However,M&A activities in the game industry are usually carried out with high premium.Finally,a large amount of goodwill is recognized,which leads to a particularly serious impairment of goodwill.Some game companies even make serious losses directly due to the provision of impairment of goodwill.In this paper,related M&A activities of Whole Easy Internet Technology Co.,Ltd.as the case study object.The M&A cases of Whole Easy Internet Technology Co.,Ltd.are typical and have common characteristics in the M&A activities of game industry,such as:traditional industries seek transformation and buy game-related enterprises with strong profitability,high premium rate,performance commitment beyond reasonable range,and large amount of goodwill impairment.In the course of the research,this paper combines the literature research method,case analysis method,as well as the characteristics and current situation of the game industry,to analyze the high initial recognition amount of goodwill and the impairment of goodwill.The study found that the over estimation of initial recognition amount of goodwill is due to the urgent need of business transformation and pushing up stock prices,the use of income method valuation and high performance commitment;In the aspect of impairment of goodwill,there are some problems such as unreasonable provision for impairment of goodwill,failure to disclose impairment information of goodwill according to regulations or false disclosure.Finally,through the study of this typical case,I summarize the relevant experience,and puts forward some suggestions to prevent the goodwill of M&A activities in the game industry,so as to provide reference for the future research of goodwill in the game industry.