Research On Risk And Prevention Of Derivative M&A Under Performance HHM Framework

With the rapid development of Chinese capital market,mergers and acquisitions and reorganizations have become one of the important means of enterprise expansion and industrial structure integration.The risk of corporate mergers and acquisitions is extremely high.This can lead to mergers and acquisitions dissatisfaction,or even failure.The emergence of performance commitment system is to control the high risk of M&A activities,which can protect the interests of investors.But the large-scale application of performance commitments in M&A and reorganization,the number of cases where performance commitments fail to meet the standards has increased year by year,which has hindered the smooth progress of M&A and reorganization to a certain extent.Although performance commitments control the risks of mergers and acquisitions to a certain extent,at the same time,performance commitments also bring certain risks of derivative mergers and acquisitions to corporate mergers and acquisitions.So How to identify the risk of performance promise in the process of M&A and how to avoid these risks effectively are the realistic problems that need to be solved urgently.Therefore,enterprises should solve the risk of performance commitment in M&A as soon as possible.This article takes Nandu Power’s acquisition of Huabo Technology as an example to analyze its performance commitment valuation method,terms setting,share repurchase,goodwill impairment,and shareholder behavior after performance commitment failures,and analyzes performance commitments in the case with relevant theoretical analysis.Use the HHM framework(hierarchical holographic model)method to identify the derivative merger and acquisition risk brought by performance commitment;analyze the adverse impact of performance commitment application process and performance commitment failure through case study method;use financial indicators to conduct in-depth comparison and analysis of performance The specific reasons for the failure to meet the target;for the identified performance commitments,the strategic risks that existed before the signing of the agreement,the valuation risk and target setting risk during the performance of the agreement,the integration risk and the risk of goodwill impairment after the implementation of the agreement,and the risk of controlling shareholder behavior Conduct a one-by-one analysis to summarize the impact of performance commitments on mergers and acquisitions;finally,based on the above analysis,propose targeted risk prevention and control measures,and conclude reasonable valuations,improve performance commitment terms,enrich performance target setting,and improve supervision And other suggestions to get case-related inspiration.Through research,this paper finds that for listed companies,although performance commitment agreements can have a positive market effect in mergers and acquisitions,they can only improve the short-term earnings of the company and cannot guarantee the long-term earnings of the acquirer.When it can be achieved,the market will give a negative response,which not only affects the current operating conditions of listed companies,but also faces the risk of merger and acquisition failure.Listed companies should not blindly rely on performance commitments in M&A and restructuring.While using them to avoid M&A risks,enterprises should manage their own derivative M&A risks of performance commitments,protect the interests of both parties,and give full play to the performance commitment system in the capital market.Promoting good order of mergers and acquisitions.