Performance Commitment And Interest Protection Of Minority Shareholders In Mergers And Acquisition

The economic wave continues to advance,and innovation has always been the first impetus.However,many companies lack substantial innovation capabilities.In this case,the strategic development of mergers and acquisition has become more porpular.In recent years,with the scale of mergers and acquisitions expanding,more and more listed companies have adopted the performance commitment.At the same time,performance commitments have brought a higher premium to mergers and acquisitions transactions.The performance commitment itself appeared in our country relatively late.For the purpose of preventing and controlling the risks in M&A transactions and preventing the interests of small and medium-sized shareholders from being undermined,until 2008,the performance commitment was proposed in the form of institutional arrangements and has rapid development.However,the performance of listed companies' failure to meet the standards and even attempt to revise their commitments.That has occurred frequently.These irresponsible behaviors have badly affected the interests of small and medium-sized shareholders.So it is particularly important to explore the impact of performance commitments in mergers and acquisitions on the interests of small and medium shareholders.Based on the analysis of relevant literature and the analysis of the status quo of the system,this paper finds that from a theoretical perspective,the implementation of performance commitment can usually send an optimistic and positive signal to the market,obtain a higher M&A premium and contribute to the tansaction,the acquired party has been restrained and encouraged in its operation,thus protecting the interests of small and medium shareholders.However,from a practical perspective,there are many shortcomings in performance commitments.For example,due to the influence of the external environment of the M&A target,including the institutional background,economic environment,and industry development,the valuation of the underlying assets is not accurate enough,so that the target enterprises are determined.The performance commitment target may also deviate from reality;the performance commitment usually has a time span of several years,which means that there is a time risk;the controlling shareholders of the two parties engaged in the M&A transaction may use the performance commitment as a profit tool for their own interests,and may actually sign unfulfilled performance commitments,so performance commitments for the protection of the interests of small and medium shareholders are likely to not achieve good results.The author selected the representative case——Yantai Zhenghai Magnetic Material Co.,Ltd.(300224)to analysis,which corroborated the above viewpoints,focusing on the performance commitments signed by the company in M&A transaction,from the market reaction to the company's financial performance.And the parties of the transaction' decision-making cost and income from three perspectives to analyze its protection effect on the interests of small and medium shareholders,and accordingly make corresponding recommendations.