The Impact Of Performance Commitments On The Interests Of Minority Shareholders In M&A

M&A risk is also increasingly apparent.M&A may easily lead to false valuations and affect the interests of minority investors.At this time performance commitment came into being.When related transactions are dominant,the performance commitment can indeed promote the target valuation more reasonable.However,non-affiliated transactions are now dominant,major shareholder returns obtained from the valuation premium is much higher than the cost of performance commitments,Therefore,major shareholders will tend to choose high valuations,and the performance commitments provide conditions for high valuations.Therefore,the performance commitment is likely to exacerbate false valuations,resulting performance commitments is not up to the standard,the company and the market generated a series of chain reaction,the stock price fell.This will affect the interests of minority shareholders.At this point,this study is very meaningful.This article investigates the internal and market reactions of the company after Steyr’s performance commitment has resulted in an overvaluation of the subject.Mainly through the company’s performance and stock price analysis to measure the interests of minority shareholders.First introduced the basic situation of A-share performance commitments and summarized the situation of Steyr’s performance commitment.Secondly,the reaction caused by the unreasonable valuation of Steyr’s performance commitment was introduced.The company’s performance and stock price were analyzed.At the same time,it also addresses its implementation risk for cash compensation.Finally,the paper concludes that the performance promises make the target valuation unreasonable and can not protect the interests of minority shareholders.The purpose of this study is to remind minority shareholders to increase vigilance.Do not blindly believe in the protective effect of performance commitments and over-rely on performance commitments to identify quality assets.It also gave suggestions on four aspects: assessment methods,the participation of minority shareholders’ participation,supervision by the CSRC,and compensation methods.