Research On The Application Of Profitability Payment Plan In Corporate Mergers And Acquisitions

Mergers and acquisitions are one of the important means for enterprises to strengthen production capacity and improve economic efficiency.In recent years,Chinese enterprises have been increasingly engaged in domestic or cross-border mergers and acquisitions.Along with the M & A boom is a series of problems caused by M & A transactions.The first is the risk of mergers and acquisitions.Due to various complexities and uncertainties in the M & A process,M & A risks may occur before,during,and after the M & A,including valuation risks,financing risks,integration risks,and subsequent debt repayment risks caused by financing risks.Secondly,Chinese enterprises often use gambling to reduce the valuation premium risk in mergers and acquisitions.With the arrival of the evaluation period for compensation commitments signed in gambling,the acquired party cannot fulfill the compensation commitments as agreed due to poor operating efficiency.Examples abound.Due to the inability of the acquired party to compensate as agreed or simply refuse to compensate,both parties of the M & A accuse each other of blaming the court,causing huge losses to the M & A party.Based on this,Chinese companies have found that Earnout can deal well with M & A risks and other issues based on research on foreign M & A transactions,and more and more use Earnout in M & A transactions.Earnout was originally born in the 1980 s in Europe and the United States and is widely used,especially for acquisitions of companies with uncertain expected earnings and difficult to predict future operating conditions,such as high-tech companies and non-listed companies.Since its development,Earnout has been used in foreign countries,and the research on terms setting has been relatively perfect.Compared with foreign countries,little is known about the research on the profitability payment plan and the setting of specific terms when it is used.This article selects Xiwang Food co.ltd.to acquire Kerr,a leading Canadian nutritional company,as the object of the case study,and adopts case studies and literature research methods to analyze the case of Xiwang Food's merger and acquisition of Kerr,a leading health care company in the North American market.The positive and negative effects of payment plans in corporate M & A transactions.At the same time,in the specific case analysis process,methods including comparative analysis were used to evaluate the effectiveness of the profitability payment plan in this research case,to illustrate that Earnout may play a role in a wider range of corporate mergers and acquisitions.The positive role of the company and explore how to maximize the profitability payment plan to maximize the positive effect in corporate mergers and acquisitions.The article is divided into six parts.The first part is the introduction,including the background significance of the research,the current status of research at home and abroad,research methods andcontent.The second part gives an overview of the profitability payment plan,including specific terms,advantages and disadvantages,and status quo.The third part is about the case of the acquisition between Kerr and Xiwang Food co.ltd..The fourth part is the analysis in the effection of the Earnout.The fifth part is based on the problems found in the case study process to make targeted policy recommendations.Finally,the full text is summarized,and the main body corresponds to three conclusions,as well as reflections on the possible limitations of this article.