The Case Study Of Earn-out Payment Method For Xiwang Food Mergering Kerr

The settlement of the consideration of M&A in China mainly adopts the method of cash payment,share payment or cash and share payment,and adopts performance compensation to make secondary adjustments to the valuation of M&A assets.In the mergers and acquisitions in which listed companies in China have set performance compensation in recent years,the acquired parties cannot complete the performance commitments stipulated in the M&A agreement.In order to avoid or reduce compensation,some performance commitment entities arbitrarily change the terms of performance compensation,and even directly reject the compensation and lead to merger and acquisition litigation,which seriously affects the legitimate rights and interests of the acquirer and minority shareholders,and attracts the attention of the capital market supervision department.In the overseas M&A market,on the basis of the traditional payment method,the Earn-out payment method has been applied to delay the settlement of the merger and acquisition consideration.Earn-out payment method reduces the risk of the merger party defaulting,unable to fulfill the M&A obligations,and improves the asset restructuring efficiency of the M&A market.By the end of 2018,there were 8 domestic listed companies in China,and the Earn-out payment method was introduced in the merger.In view of the positive effect of Earn-out payment method in reducing the risk of mergers and acquisitions and improving the efficiency of M&A market,this paper selects the case of West King Food Merger Kerr as the research object,analyzes the formation and mechanism of Earn-out payment method,and demonstrates Earn-out payment.The way to effectively control the risk of mergers and acquisitions in the merger and acquisition of empirical case analysis.This paper first analyzes and summarizes the participants of Xiwang Food M&A transactions,the motivations of M&A,payment arrangements and the common payment risks in M&A.Then analyze the influencing factors of the transaction consideration payment in the case,and analyze the role of the Earn-out payment method according to the deferred payment of the Earn-out payment method,the performance condition setting,and the incentive clause of the excess reward.The intrinsic logic and a summary of its path.Then compare the Earn-out payment method with the performance compensation method,and analyze the advantage of the Earn-out payment method compared with the performance compensation payment.Finally,based on the results of the case study,the paper summarizes theapplication scenarios of the Earn-out payment method,the specific terms and conditions,and the preventive measures that may arise.It is hoped that through the research of this paper,we can further enhance the importance attached to the Earn-out payment method in China’s M&A market,expand the application of Earn-out payment method in China’s M&A market,and strengthen the M&A entity’s use of payment methods to effectively prevent and control M&A risks.And provide practical lessons for similar transactions.