The extent to which the investors' synergetic optimism is justified: findings on impairment of goodwill recognized in major M&A deals over 2008-2012 involving Russian companies
Subject The article continues a series of publications dedicated to the research of major integrated transactions involving Russian companies. I identified and analyzed 50 major M&Atransactions over 2008-2012, which resulted in goodwill recognition in the buyer's financial statements. This article studies the subsequent annual test results of the recognized goodwill for impairment. Objectives The purpose is to identify the extent to which the acquisitions by (and of) Russian companies at the price exceeding their fair value can be justified. Methods At the earlier stages, I identified major integrated transactions over 2008-2012, where Russian companies acted as sellers or buyers, analyzed the financial statements that reported the recognized goodwill. The detailed analysis showed the exact volumes of transactions, the amount of recognized goodwill, and its causes. This article considers the results of the fourth stage, during which I reviewed the financial statements of the companies analyzed at the previous stages in terms of existence of impairment of the acquired goodwill. Results I identified the highest risk of recognizing the impairment of goodwill in financial statements; prepared Top 10 rating of the biggest volumes of goodwill impairment over 2009-2014 that was recognized in major integrated transactions involving Russian companies for 2008-2012. The study presents the comparison of the rationale behind the causes of overpaying for goodwill in the integrated transactions and charging-off the impaired goodwill. Conclusions The article may be useful for all those interested in integration processes in Russia from the perspective of unique statistical material presentation.
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