Analysis Of The Motivation And Financial Consequences Of Performance Commitments

Performance commitment refers to the assignor's commitment to the asset purchaser in the future of the merger and acquisition process and the backdoor listing process.If the actual operating performance of the transferor fails to meet the promised performance standards,it is necessary to compensate the buyer for the lower than expected profits in the actual profits.Some scholars believe that performance commitment plays a role in restraining the high valuation of M&A companies and protecting the interests of small and medium shareholders,and also has an incentive role in the operation and development of companies.However,some scholars argue that performance commitment provides an opportunity for large shareholders to transfer profits to some extent,and unreasonable performance commitment may cause the financial situation of companies to suffer.No small challenge.Scholars hold different opinions in the debate of the two opinions.The two opinions from different perspectives make the atmosphere of the whole academic session more intense.Although it has been widely used in the era of mergers and acquisitions,it is difficult to effectively prevent and control long-term risks in mergers and acquisitions,and setting too high performance commitments will also increase the possibility of companies to make irregularities.With the increasing number of mergers and acquisitions,the risk of performance commitments has gradually aroused people's reflection.At present,most of the research on performance commitment in papers and journals focuses on Incentive effectiveness,so this paper puts forward a new research perspective,that is,the motivation and financial consequences analysis of performance commitment.In order to prove the theoretical and practical significance of the theme of this paper,the first chapter discusses the research background and significance of this paper,and summarizes the research content and research methods in a concise language.In the second chapter,using the method of literature reading,the author reviews the relevant literature on motivation and financial consequences of performance commitment at home and abroad,reads the works of outstanding scholars,gets inspiration,finds meaningful topics,and forms his own analytical framework and ideas.Then the third chapter introduces the basic situation of performance commitment system before the formal analysis of the case.On this basis,it explains the development process and business areas of the merger and acquisition companies in the case,and outlines the process of merger and acquisition and the specific situation of performance commitment from determination to implementation,completion and compensation,including compensation arrangements and compensation methods.Chapter IV links theory with practice and uses case analysis to analyze the motivation and financial consequences of performance commitment in the merger and acquisition of Kaifeng Pharmaceutical by Furen Pharmaceutical Industry.Specifically,it includes: first,the motivation of performance commitment is explained,and the content roughly includes realizing the overall listing,expanding the scope of business,resolving the competition in the same industry,and secondly,the performance commitment of Kaifeng Pharmaceutical Industry is analyzed.The financial consequences of Kaifeng Pharmaceutical Performance Commitment are discussed from the perspectives of financial index analysis,equity transfer and related transactions.Finally,the fifth chapter reviews and thinks deeply about the previous analysis,summarizes the cases and puts forward constructive conclusions and practical suggestions,and puts forward the deficiencies and improvements of the study in view of the actual content explained in this paper.This paper links the motivation of performance commitment with financial consequences,helps investors better analyze performance commitment,and provides ideas for other companies to use performance commitment rationally.It also provides a new entry point for regulators to improve the mandatory requirements of performance commitment.