Study On The Avoidance And Prevention Of Xinning M&A Risk By The Valuation Adjustment Mechanism

Mergers and acquisitions are an important way for listed companies to complete strategic adjustment and transformation,optimize asset structure,and improve operational efficiency.With the gradual improvement of China’s capital market and the gradual completion of the restructuring of state-owned enterprises,M&A activities have also shown an increasing number and scale.Since the performance of the acquired company will have a great impact on the development of the listed company,many listed companies will require a performance commitment agreement with the merged company to avoid the risk of mergers and acquisitions as much as possible.Performance Commitment Whether China’s capital market mergers and acquisitions can evade M&A risks,whether to truly achieve the goal of correcting M&A valuation and protecting the interests of small and medium-sized investors has become a problem facing more and more enterprises.Based on information asymmetry theory,uncertainty theory,goal setting theory,incomplete contract theory and dynamic M&A risk control theory,this paper expounds the related concepts and theoretical basis of M&A risk.From the preparation stage,transaction stage and integration stage of M&A,the whole process of Xinning’ s acquisition of Yicheng was reviewed in detail,and the deep motivation of this case merger and acquisition was analyzed,and the risk of Xinning merger and acquisition based on Hierarchical holographic modeling was analyzed.Identify.Through the calculation of the short-term market performance and financial status of Xinning,in-depth analysis of the reasons for the poor evasion of the performance commitments of Xinning M&A,and finally,from the rational evaluation before mergers and acquisitions,the optimization of performance commitment design in mergers and acquisitions,the use of performance commitment after mergers and acquisitions Effectively integrate three aspects to propose effective optimization to avoid merger and acquisition risks.Through case analysis,this paper finds that the essence of performance commitment agreement is a merger risk prevention and control contract,which enables M&A enterprises to protect their own interests in the future.Because this added value increases the premium rate of M&A enterprises,high premium M&A risks may result in Operating profit cannot compensate for the cost and expense of the merger.In addition,the performance commitments in the merger can boost the market performance of the company in the short term,and stimulate the investment of small and medium investors in the M&A enterprises.However,in the long run,whether the investors can obtain the income,but also measure the long-term development and financial status of the enterprise..Finally,it is recommended that mergers and acquisitions companies should comprehensively analyze the cost of mergers and acquisitions and the risks that may be brought about by reasonable valuation.Do not blindly rely on performance commitments,and design performance targets and inspections according to the status and development status of the acquired companies.Time limit,optimize performance commitment compensation,and constrain management behavior,thereby reducing risks in mergers and acquisitions.