Analysis On The Impact Of Goodwill Surge And Performance Under Multiple Mergers And Acquisitions With High Premium

For the past few years,the prosperity of the Internet has been accompanied by the emergence of new media platforms.Under the influence of newly-developing network technologies,traditional paper publications have suffered the impact of digital publications,and the market has greatly changed the demand for paper media industry and book advertising industry,leading to the stagnation of the development of traditional cultural media industry,and the significant decline in the market scale and profits of companies in related industries.Thus,Chinese cultural media industry urgently needs to adjust its business strategy reasonably according to its actual situation,and find new profit growth point and new development outlet.However,since the emergence of a large number of mergers and restructuring activities in the media industry,some companies’ investment behavior is irrational,and mergers and acquisitions events at this time show the characteristics of "three high" : With high valuation,high premium and high performance commitment,large-scale goodwill also emerges.Once the promised performance of the target enterprise fails to reach the standard or fails to bring excess returns to the acquirer after the commitment period,this part of goodwill will face the risk of impairment.On the basis of above background,firstly the paper adopted literature analysis to summarize the domestic and foreign literatures on the motivation of premium merger and acquisition,the factors affecting goodwill impairment and the impact of goodwill impairment performance.Then the case analysis method is used to further study the typical cases of goodwill "thunder" caused by three premium mergers and acquisitions of listed enterprise Tianzhou Culture during2013-2018.This paper first sorted out the situation of premium mergers and acquisitions in the media industry in recent years,and compared it with the three mergers and acquisitions of Tianzhou Culture,came to the conclusion that these three mergers and acquisitions are of high premium.Then it reviews the whole transaction process of these three mergers and acquisitions as well as the formation of goodwill and subsequent impairment.Then this paper further analyzes the reasons for goodwill impairment from the two aspects of high performance commitment and management earnings management,and on the basis of existing data,analyzes the impact of this huge goodwill impairment on the company’s performance.Through the systematic analysis,this paper tries to have a further analysis of the causes and consequences of this typical case,and summarizes the experience and lessons that Tianzhou Culture and other media enterprises can learn from this event.The analysis shows that the high premium merger and acquisition makes the goodwill on the book of Tianzhou culture high.However,after the merger and acquisition,due to the failure of the target enterprise to fulfill the high performance commitment and the short life cycle of online games,as well as the earnings management and cash motive of the management,the risk of goodwill impairment is further increased.In 2018,the goodwill impairment risk of Tianzhou Culture broke out in a concentrated way.After a huge amount of goodwill impairment was set aside,the operating profit of the company was swallowed and its performance declined seriously.In addition,its profitability and development ability became weaker,and the debt repayment pressure increased.Finally,in view of the motivation of goodwill impairment and the impact of goodwill impairment on company,this paper proposes some suggestions,such as reasonable development of merger and acquisition plan,prudent high performance commitment.In addition,it also suggests that relevant institutions should strengthen external supervision and improve corresponding policies,so as to standardize enterprise merger and acquisition activities and goodwill impairment provision behavior,and then achieve the aim of avoiding the risk of goodwill impairment effectively and stimulating the steady development of the economic market.