The Motivation Research Of The Control Power Transfer And Performance Commitment In Mergers And Acquisitions

In recent years,our government put forward that our country should win in the three tough battles: preventing and defusing risks,targeted poverty alleviation and pollution control.How to decrease the financial risk is the most important work in the battle of preventing and defusing risks.In this situation,de-leveraging policy is strengthened gradually,which results in the companies' financial curtailment and increase the financial difficulty for minor enterprises and private enterprises.Most stocks' price in our capital market fell by a large margin in the 2018 because of the economic slowdown and the Sino-U.S.trade war.Therefore,companies which pledged most of its stock faced with the risk of pledge of stock rights and some controlling shareholders of private enterprises tried to get financial support by transferring their controlling right to other wealthy company.The original controlling shareholder of Songfa Co.,Ltd transferred its corporate control right of the Songfa to another company and made a special performance commitment,which attracted the attention of the writer and gave motivation to the writer to explore the motivation of transferring controlling right and making performance commitment.Firstly,in the essay,the background,significance,trail of though and method of research will be introduced.Secondly,the definitions of the right of control,merger and acquisition and performance commitment will be defined.The research situation of the merger and acquisition and performance commitment,theoretical foundation,related institutions and the brief situation of the performance commitment are introduced one by one in this part.Thirdly,the details of the case will be explained and the motivation of original controlling shareholder transferring its control right and making performance commitment will be analyzed by standing at the angle of the original controlling shareholder.After writer's analysis,the reason why original controlling shareholder of Songfa Co.,Ltd transferred its control right is that original controlling shareholder wants to get financial input from other company due to that the company and original controlling shareholder lack of sufficient money to support the development of company.And the reason of making performance commitment is to decrease the risk which faced by the both sides in the deal and increase the price of stock at the same time.There were some similar deals in which the original controlling shareholders of some private enterprises transferred controlling right and made performance commitment in our capital market in 2018.After the similarities and differences of these similar deals are summarized at the last part of the essay,it is found that private enterprises' difficulties in financing became worse in 2018.Last but not least,the advantage and disadvantage of the performance commitment in the deal are also concluded in the last part of the essay.It is hoped that this essay will provide new thinking to the subsequent merger and acquisition and promote the virtuous cycle of our country's capital market.