The Research On The Risk Identification And Countermeasures Of Performance Compensation Commitment In The Merger And Acquisition Of MeiDu Energy Corporation

With the development of economy and technology in China.Many enterprise take mergers and acquisitions(H&A)as a way to enhance their market competitiveness.In recent years,mergers and acquisitions in China’s capital market are increasing year by year,Between 2008 and 2016,the scale of mergers and acquisitions in China has grown from 24 million yuan to 2,52 trillion yuan.In nine years.the value of mergers and acquisitions transaction has increased by nearly 10.5 times.Under such a large scale of mergers and acquisitions,the risk of mergers and acquisitions is also growing.In recent years of mergers and acquisitions,the application of performance compensation commitment agreement is more and more extensivePerformance compensation commitment agreement formally presented in 2008,the initial purpose of the performance compensation commitment agreement used by enterprises in mergers and acquisitions transaction is to prevent and control the risk of mergers and acquisitions,improving the success rate of mergers and acquisitions.At the same time,it can also effectively protect the legal rights and interests of minority shareholders.Performance compensation commitment agreement as a system agreement,its application scope is more and more extensive.But performance compensation agreement helps enterprises to prevent and control risks at the same time there are also a series of risks.In recent years,there have been many cases of failure in the use of performance compensation agreements in China’s market,thereby undermining the rights and interests of shareholders of both parties,at the same time,it also hinders the development of the enterprise itself,what’s more,they get caught up in a complex equity dispute.This paper based on real option theory,information asymmetry theory and uncertainty theory and takes the case of the acquisition of Delangneng Power by MeiDu Energy Corporation as an example,the impact of the performance compensation agreement on this incident and its risks are analyzed.Finally,according to the risk of performance compensation agreement,the corresponding suggestions are put forward,I hope to be able to avoid the risk of performance compensation agreement to provide reference and thinking.This paper finds out through analysis and research:in the mergers and acquisitions activity,not only are there regular M&A risks but also there’s a particular risk when enterprises in the role of performance compensation commitment agreement.And due to the market environment,the change of national policy and other factors,making performance commitments difficult to meet and even compensation for their performance is difficult to achieve.In this case,Delangneng Power and Medus Energy failure to meet performance commitments in the first year of the commitment period.It is not worth learning from developing higher performance commitments without taking full account of existing risks,for more effective performance compensation commitments,enterprises should be in the stage of merger and acquisition preparation,schematic design phase raise risk awareness,guard against loopholes in compensatory commitment agreements,and effectively curb high premiums,perfect compensation payment method.So as to protect the interests of both sides and promote the healthy development of M&A market.