Research On Risk Management Of Betting Agreements In Corporate Mergers And Acquisition

In recent years,due to the fierce competition in the market,it has become more and more common for companies to expand their market shares through mergers and acquisitions.As of December 2021,the volume of corporate M&A transactions in my country has reached12,790.However,in actual mergers and acquisitions,there are information barriers and deviations from the actual operating conditions of the target company,which lead to an inaccurate valuation of the target company.Therefore,the VAM agreement should be used in corporate acquisitions from time to time.Therefore,the gambling agreement should be used in enterprise acquisition.It is convenient to control the risk of valuation deviation caused by factors such as information asymmetry and valuation method errors,encourage the merged enterprise to achieve performance goals,and reduce the risk of integration failure,because of the relevant terms and goals are agreed in advance.However,improper use of the VAM agreement may also lead to the blind pursuit of shortterm performance,compensation for high performance commitments,and valuation and strategic deviations.It will cause financial losses to the group as a whole.Therefore,it is of far-reaching significance for enterprise mergers to study the risks of VAM agreements in corporate mergers and propose specific risk prevention and control measures.This paper intends to study the specific content of the enterprise’s gambling agreement and the risks before and after the signing of the gambling,using the literature analysis method,case analysis method,and qualitative and quantitative combined analysis method.So,it chose the typical representative China Literature Group’s acquire Xinli Media for a series of risk management research and analysis,which is affected by many uncertain factors and has the characteristics of high goodwill and high intangible assets.Firstly,it identifies and analyzes the valuation risk and performance clause setting risk before China Literature Group signed the M&A VAM agreement and the merger’s payment,goodwill impairment,and business integration risk.Then,according to the identified risks,the rationality of the valuation of Xinli Media’s gambling agreement and the financial risk of China Literature Group after the gambling agreement are evaluated,and whether the risk has a significant impact on the enterprise is analyzed.Research and analysis found that China Literature Group overestimated the value of the merged enterprise before the merger,which led to the later allocation of goodwill and trademark impairment of4.41 billion;in the later stage of the merger,due to the unreasonable performance clause setting,payment method,and unreasonable business integration,the enterprise lost its market capital.There is a short-term decrease in liquidity and reduced cash flow stability.Although there is no financial risk to the company,its overall state is not as good as before the merger.Finally,the paper propound relevant suggestions.In the early stages of merger bet,choosing a reasonable valuation method and establishing a comprehensive and systematic valuation model;designing reasonable gambling terms and using repeated games.In the late stage of mergers and acquisitions,establishing a financial integration system,assessing financial risks regularly;strengthening regulatory control to prevent the risk of goodwill impairment;improving management capabilities and establishing strategic partnerships to achieve strategic goals of sustainable development.This thesis is hoped that studying the case of China Literature Group’s gambling acquisition of Xinli Media will bring experience and inspiration to other companies in their gambling acquisitions.