A Study On The Motivations And Economic Consequences Of Mergers And Acquisitions With High Valuation And High Performance Commitments

In the context of China's supply-side structural reforms,mergers and acquisitions have become an effective means for listed companies to carry out industrial transformation and upgrading,exert corporate synergy,and maintain long-term stable development.In order to avoid risks in corporate mergers and acquisitions,companies often choose to sign performance commitment compensation agreements.Performance commitment agreements can not only revise the M&A valuation to a certain extent,but also effective performance commitments can mobilize the management enthusiasm of corporate management and enhance team cohesion and creativity.However,in China's listed companies on the Growth Enterprise Market,the phenomenon of high-value,high-performance committed mergers and acquisitions has prevailed in recent years and has shown a rising trend.So what are the reasons for the high valuation and high performance commitment M&A and the economic consequences? It is worth studying in depth.This article first sorts out related literature from three aspects: high valuation and high performance commitment definition,the motivation of performance commitment M&A and the economic consequences of performance commitment M&A.Secondly,the related theories such as the motivation theory of M&A,the valuation method of target companies and the evaluation method of M&A performance are described.Then,based on the current policies regarding performance commitment M&A of listed companies and the status quo of performance commitment M&A of GEM listed companies,a case analysis method was adopted to selected the gem listed Yuanfang information company mergers and acquisitions of Weier technology company as a case study object.The five dimensions of macro policy,industry development opportunities,corporate synergy,shareholder interest drive,and intermediary interest orientation are analyzed to analyze the reasons for the high valuation and high performance commitment of the case company,and from the three dimensions of corporate operating performance,stock price changes,and goodwill.Analyze the economic consequences of unfulfilled high-performance commitments on distant information.The study found that when the performance promise of the merged company fails to be realized,the profitability,solvency,operating capacity and cash ability of the merged company will be negatively affected;the stock price of the merged company will show a downward trend,causing the overall value of the company to gradually decline;The goodwill of the merger and acquisition enterprises will be significantly impaired.Finally,based on the conclusion of the case analysis,some suggestions are made to regulate the performance commitment M&A of China's listed companies from the perspectives of rationally setting performance commitments,perfecting information disclosure,improving M&A supervision mechanisms,and strengthening intermediary institutions' responsibilities.