A Case Study On Risk Prevention And Control Of High Premium Mergers And Acquisitions For Listed Companies

In the past decade,with the implementation of “the Belt and Road” cooperation and supply-side reform,A-share market set off a wave of mergers and acquisitions,and high premium mergers and acquisitions occurred frequently.However,a number of listed companies set aside a huge amount of goodwill impairment provisions for high premium M&A in 2018.Net profits and share prices plummeted,and shareholders suffered heavy losses.It shows that there are significant risks in high premium M&A.Therefore,the topic of this paper is risk prevention and control of high premium M&A for listed companies,aiming to provide reference opinions on risk prevention and control of high premium M&A for enterprises and regulators.After reading and summarizing the domestic and foreign researches of M&A,this paper applies the theory of M&A to study the risk prevention and control of high premium M&A through case analysis.This research involves three parts.The first part is the theoretical analysis,which includes the characteristics and motivation of high premium M&A,the types of risk and their influencing factors associated with high premium M&A,the objectives,rules,processes and means of risk prevention and control.The second part is the case study.This paper takes Oriental Seiko’s high premium acquisition of Pride as a case,analyzes their M&A motivation,studies Oriental Seiko’s M&A plan and its implementation risk,analyzes Oriental Seiko’s risk prevention and control system set for M&A and finally evaluates it’s effect.The third part is suggestions on high premium M&A provided for enterprises and regulators.Through the research,this paper draws some viewpoints and conclusions,which are mainly as follows: first,measures of risk prevention and control were not properly applied by Oriental Seiko,there was not a lot of oversight on Pride,as a result,Oriental Seiko failed to find the decline in profitability,asset impairment and other problems of Pride in a timely manner;second,high premium acquisition of Pride failed to make Oriental Seiko achieve performance growth or strategic transformation,the M&A target was not achieved;thirdly,inspired by above analysis,the paper argues that high premium M&A should meet the strategic need of enterprises,enterprises should establish risk prevention and control mechanisms for high premium M&A,and regulators should strengthen supervision over high premium M&A.