Research On Goodwill Impairment From Mergers And Acquisitions Between F Company And C Company

In recent years,with the adjustment of industrial structure and the introduction of national encouragement policies,companies have sought to transform and upgrade and enhance their competitiveness through mergers and acquisitions.While the number and scale of mergers and acquisitions in the entire capital market have risen sharply,goodwill bubbles have also rapidly accumulated.The phenomenon of “thunderstorms” of large-scale impairment of goodwill occurred in 2017-2020,seriously jeopardizing the stability of the capital market.Based on this background,in order to explore the reasons for the frequent occurrence of huge goodwill impairment and propose effective improvement measures,while enriching the literature research related to goodwill impairment,this article first uses the literature analysis method to introduce the core concepts such as the provision of goodwill impairment.Then,it focuses on the case of company F’s acquisition of company C for a specific analysis.From the four aspects of the initial confirmation and measurement of goodwill of the merger,the operation of company C after the merger,the follow-up measurement method of goodwill and the management motivation,the reduction of goodwill Through the analysis of the problems and reasons in the whole process of value accrual,it is found that the problems are mainly in the following four aspects: due to unreasonable valuation parameters and misjudgment of the target operating level,the initial M&A premium is too high;the performance of the target caused by factors such as slope has not met expectations;the acquirer has a "big bath" and performance promises to compensate for the earnings management motivation of a one-time payment;the current impairment test method has inherent drawbacks of subjectivity and lag.In view of the problems and causes of the above-mentioned impairment provision of goodwill,this article proposes the following suggestions and preventive measures: First,when acquiring company C,company F should fully assess the operational risks that may arise from cross-border mergers and acquisitions,and also select estimates reasonably and carefully;second,company F can add a repeated game mechanism to its performance commitments,and add non-financial indicators such as research and development expenses and related party transaction levels to conduct comprehensive inspections on company C;Thirdly,the combination of impairment test method and amortization method can reduce the impact of goodwill impairment on F company’s performance level,and also effectively reduce the manipulation space of earnings management.