Research on Causes and Risks of High Premium Mergers and Acquisitions

Abstract

In recent years, the rapid development of the capital market has pushed the cross-border mergers and acquisitions of Chinese enterprises to a climax, and witnessed the emergence of a large number of high-premium mergers and acquisitions. However, there are inevitably risks behind it, which has threatened the operation of the enterprise itself and the capital market as well. This paper, with BY-HEALTH's acquisition of LSG as an example, analyzes the causes and risks of high-premium mergers and acquisitions, and puts forward relevant suggestions to prevent the formation of high-premium mergers and acquisitions using the method of case study. The study results show that the formation of high-premium mergers and acquisitions is attributed to the high expectations of the acquirer's synergy effect and the inaccurate assessment. High-premium mergers and acquisitions will expose enterprises to goodwill impairment and financial risks, resulting in serious economic consequences. This paper expands the research results of the causes and risk analysis of high-premium mergers and acquisitions, and provides experience and enlightenment for the future mergers and acquisitions of Chinese enterprises.