Research On Performance Commitment Risk In Enterprise M&A

With the continuous expansion of the number and scale of M & A and restructuring transactions in China's capital market,the supervisory layer designed and introduced a performance commitment compensation system based on the original intention of improving the efficiency of mergers and acquisitions and protecting the interests of the acquirer.This is a contract form innovation based on a valuation adjustment mechanism.It has been widely used by both parties in M ??& A and restructuring.However,with the end of commitment period,cases of unfulfilled performance commitments have frequently emerged,and the economic consequences of listed companies' performance changes and stock price declines have frequently occurred.Listed companies have brought serious losses.While the performance commitment system has also been applied,many new risks have arisen.Therefore,how to fully identify the risks related to performance commitments in M ??& A and reorganization,clarify the relevant risk formation mechanism,and take measures against the sexual response strategy deserves re-examination by all parties concerned.This article first reviews domestic and foreign literature related to performance commitment and lays the theoretical foundation for this study: information asymmetry and signal transmission mechanism have spawned "virtually high" performance commitments,and the principal-agent relationship may lead to the opportunistic behavior of the management of the target company Secondly,the institutional background of China's performance commitment and its current situation are examined.Based on this,taking the smart promise event of Ming Jiang as an example,a hierarchical holographic model(HHM)is used to make performance commitment risks before the agreement is signed—commitment period—to The three important periods after the period are identified,and the logical relationship between the identified risks is further sorted out.Through the above research,this article draws the following conclusions: Before signed,the target company borrows a performancecommitment agreement from the listed company to obtain a high amount of consideration from the listed company,forming Commitment to set risks,and the listed company's valuation premium risk due to blindly and confidently not fulfilling its review obligations,the above risks make the objective possibility of a breach of the contract high;during period,the listed company's strategic integration risk is high due to the lack of integration.In order to avoid triggering compensation obligations,the target company may adopt excessive expansion or earnings management behaviors,making business risky.The sharp increase in the above risks indicates that the subjective possibility of a breach of contract has increased;after the agreement expires,it is limited to the imperfection of relevant laws,and there is a risk of implementation of the compensation agreement,which is likely to become a "paper",and the listed company may face the risk of impairment of goodwill.This article proposes targeted risk response and control measures for listed companies at different times of risk occurrence,hoping to help acquirer correctly understand the performance compensation agreement and avoid agreement derivative New M & A risks;provide advice to investors and regulators at the same time,hoping to purify the market environment and promote the development of the capital market.The main innovations of this article are:(1)use the HHM framework to identify the risks associated with performance commitments to help listed companies avoid relevant risks at the practical level;(2)establish a logical framework for the identified risks and explain The formation mechanism of related risks has expanded the content of theoretical research.However,given the objective difficulties of data acquisition and the objective limitations of single case studies,the universality of this study needs to be further explored.