A Study Of Goodwill Impairment And Its Impact Under High Premium Mergers And Acquisitions

In recent years,the global economy has fallen under the gloom of the epidemic,while the M&A capital market has continued to boom.2021,China’s M&A market alone saw a deal value of RMB 637.4 billion,accounting for 13% of the global M&A market,with a total of 12,790M&A deals.This reflects that M&A has become one of the very important components of China’s capital market and plays an increasingly important role in the global market.However,with the increasing number and scale of M&A in China,the problems of high M&A premiums,high performance commitments and high goodwill in the M&A market have also started to emerge gradually,laying huge hidden dangers for goodwill impairment at a later stage.Some of the M&A companies began to frequently experience rapid performance declines or even losses once the performance commitment period expired and they were no longer subject to performance commitment regulation.The risk of huge goodwill impairment ensues,causing some enterprises to turn "goodwill" into "injury goodwill" and even completely swallowing up corporate profits,and performance thunderstorms occur all the time,causing significant losses to both investors and corporate development,and also having a negative impact on the smooth development of the capital market.It also has a negative impact on the stable development of the capital market.Therefore,how to reduce the risk of goodwill impairment formed under high premium mergers and acquisitions and avoid the occurrence of goodwill "thunderbolt" events has become a key concern for enterprises,investors and the market in recent years.In this paper,we select the case study of the acquisition of Jiuxin Medical by a listed company,Dashi Intelligence.Firstly,the research and related literature conducted by domestic and foreign scholars on high premium M&A and goodwill impairment are sorted out,summarized and summarized.Secondly,the specific process of Dashi’s M&A of Jiuxin Medical,the formation of huge goodwill and the specific situation of impairment are reviewed and introduced.Using the methods of data analysis,comparative study,event study,and literature study,the reasons for the formation of high goodwill under the premium M&A of Dashi,the causes of the subsequent large goodwill impairment,and the impact caused by it are explored in depth.The study found that:(1)at the early stage of M&A,the overestimation of the value of the subject enterprise due to performance commitment,management’s self-confidence and lack of prudence in assessing the enterprise value were the reasons for the high premium M&A.(2)After the M&A,the poor synergy effect,macroeconomic fluctuations under the epidemic and intensified market competition led to the decline of Juxin Medical’s performance,and after the huge goodwill impairment,it seriously swallowed up Dashi’s profits,resulting in various impacts such as stock price fluctuation and financial performance decline.Finally,based on the above research findings,this paper puts forward suggestions and insights on listed companies’ prevention of goodwill impairment risk under high premium mergers and acquisitions to enrich the research system of listed companies’ goodwill impairment risk.