Study On Goodwill Impairment Of Successive Mergers And Acquisitions Of Ruikang Pharmaceutical

With the continuous development of the market environment and the development of economic scale,more and more enterprises have carried out mergers and acquisitions to adapt to the changing market environment,prompting enterprises to expand their scale and achieve diversified development.At the same time,the Chinese government has strengthened the supervision of mergers and acquisitions,formulated many policies related to mergers and acquisitions,and continuously improved the economic market environment.In recent years,China’s pharmaceutical industry has developed rapidly,which is also related to the introduction of favorable policies,and pharmaceutical companies have also joined the wave of mergers and acquisitions,expanding from single drug production to diversified pharmaceutical companies.However,in the process of M&A,the goodwill of the enterprise continues to increase due to the payment of higher M&A consideration,coupled with the fact that the enterprise does not have a provision for goodwill impairment within a reasonable time,resulting in many problems in the provision of goodwill impairment,and even causing continuous losses and eventual bankruptcy.This paper uses literature research method,case analysis method,event research method and financial index method to organize relevant literature and analyze the goodwill impairment problem after successive mergers and acquisitions of Ruikang Pharmaceutical.Firstly,the goodwill and goodwill impairment of listed companies in the pharmaceutical industry are systematically analyzed,and the goodwill impairment risk of listed companies in the pharmaceutical industry is analyzed by descriptive statistical methods,and secondly,the goodwill impairment situation under continuous mergers and acquisitions of Ruikang Pharmaceutical is introduced,mainly including company profile,continuous M&A process,types of M&A targets,huge goodwill formed by M&A,goodwill impairment,goodwill impairment,goodwill impairment testing process and information disclosure,etc.On this basis,the reasons for the impairment of goodwill under successive mergers and acquisitions of Ruikang Pharmaceutical are analyzed,and it is concluded that the reasons for the impairment of goodwill are mainly the generation of huge goodwill caused by high-valuation mergers and acquisitions,the disconnection of the capital chain caused by the lack of analysis and judgment of the macroeconomic situation and the radical expansion of the capital chain,the performance commitment of the target enterprise not meeting the standard,and the existence of surplus management motives.Then,the economic consequences of goodwill impairment are analyzed,and the economic consequences of Ruikang Pharmaceutical’s huge goodwill impairment provision are analyzed by using three methods:event research method,financial performance index method and EVA performance evaluation,and the economic consequences arising from short-term and long-term analysis,including short-term negative market effects caused by the decline in the company’s stock price,the company’s financial indicators are not optimistic,and the EVA performance declines,which are adverse economic consequences for the enterprise and hinder the development of the enterprise.Finally,in view of the causes and economic consequences of huge goodwill impairment,relevant measures are proposed to prevent the risk of goodwill impairment.Specifically,enterprises should strengthen the process of target evaluation,reasonably set M&A commitments,pay close attention to current market dynamics,formulate clear business objectives according to the economic situation,and strengthen the supervision of goodwill impairment.In addition,for the entire pharmaceutical industry,enterprises can refer to and take relevant suggestions,which can effectively reduce the risk of goodwill impairment,thereby promoting the high-quality development of the industry.