Case Study On Performance Commitments Of Xinning Merged E-trans

The number and scale of China's M&A transactions have shown explosive growth since 2013,and more and more M&A parties have chosen to use performance commitments in M&A transactions,allowing this innovative contract model to coordinate M&A transactions all stakeholders.At the same time,the contractual model of performance commitment is also constantly enriching with innovation in the booming development of M&A transactions.As a result,performance commitments,as a key issue in M&A transactions,have seen a significant increase in their use each year.However,in recent years,some unreasonable operations of performance commitments have caused many problems in the practical application.People are paying more and more attention to the selection motivation and implementation effect of performance commitments for M & A,and performance commitments that have not been realized for many years are worthy of further investigation.First of all,this paper sorts out the literature on M&A performance commitments at home and abroad,and carefully studies related concepts and theories.Secondly,this paper combines theory with practice,the case analysis method is selected to take Xinning merged E-trans as the research object,and analyze the reasons why the two parties choose to use performance commitments in M&A transactions,the effects of implementation,and the reasons for not achieving them for three consecutive years.The detailed analysis steps are as follows: Step one,outline the basic situation of both parties of the merger,the motivation of this merger,the transaction process and scheme,and the performance commitment scheme and the realization of compensation should also be explained to lead to subsequent case analysis.Step two,consider the motivation for entering into performance commitments from the two perspectives of the acquirer and the acquiree.Step three,study the effects of performance commitment from the three aspects of synergy,company internal response and market response.In addition,the financial index method is used to analyze the synergy,the CAR method is used to analyze short-term market response,the BHAR method is used to analyze long-term market response.Step four,from the three aspects of the performance commitment's offeror,offeree and scheme,analyze the reasons why the performance commitment in the case has not been achieved for three consecutive years.Then,the corresponding conclusions and enlightenments are drawn based on the above case analysis.Based on the above case analysis,this paper finds that the motivation for the two parties to enter into performance commitments is essentially for their own fundamental benefits.Performance commitments will significantly enhance the synergy of the merger in the short term,but can only generate limited benefits.Furthermore,Performance commitments will have a negative impact on corporate governance.Although performance commitments will stimulate the secondary market to bring a sharp rise in stock prices,they have a short period of time and limited impact.There are many reasons why performance commitments have not been achieved for many years,including the offeror,the offeree and the scheme.Finally this paper puts forward corresponding enlightenments such as comprehensively assessing operating risks,paying attention to the matching of business resources,and reasonably assessing the value of targets.