Research On The Motivation And Effect Of Valuation Adjustment Mechanism In Enterprise M&A

M&A can help companies achieve the goals of expanding production and operation scale,improving profitability,optimizing the industrial chain,and promoting sustainable development.As an optional subsidiary agreement in M&A and reorganization,Valuation Adjustment Mechanism can guarantee the realization of the company’s merger and acquisition goals.The design of Valuation Adjustment Mechanism will affect the results of corporate M&A.If the design is reasonable,the future performance of the merger and acquisition parties will achieve a win-win situation.Otherwise,both parties may suffer losses.A statistical analysis of our country’s VAM in M&A in recent years found that many companies failed to gambling because they failed to meet the requirements for gambling performance.The final performance commitment party had to use equity or a huge amount of cash to pay compensation.Therefore,when a company signs a VAM in an M&A,it must do a prudent analysis of it in order to achieve the M&A goal.The introduction of Valuation Adjustment Mechanism in my country is relatively late,and its theoretical research and practical application are still in its infancy.The research literature needs to be enriched,and the application effect is not clear enough,and there are many problems to be solved in practical application.Therefore,it has certain theoretical and practical significance to conduct research on the motivation and effect of the use of Valuation Adjustment Mechanism in corporate M&A in the form of cases.This article uses information asymmetry,incentives and other theories,taking TJ’s merger of SY company as the research object,and conducts an in-depth and systematic study of the motivation and effect of using Valuation Adjustment Mechanism in M&A.Firstly,it analyzes the status quo of the use of Valuation Adjustment Mechanism in the M&A of Chinese enterprises from four aspects: the number of events,the amount of funds,the performance of the industry,and the results of the gambling merger;Secondly,the plan for the merger and acquisition of SY by TJ company.Review the process and the process;Then,it conducts an in-depth analysis of the motivation and effect of TJ’s gambling and acquisition of SY.Motivation analysis found that TJ Company signed a VAM to control M&A risks,guarantee the realization of M&A performance,enhance investor confidence,realize the company’s business transformation and make up for valuation premiums;SY Company signed a Valuation Adjustment Mechanism to quickly reach M&A,supplement working capital and obtain M&A premium.The effect analysis found that the case has the effect of guaranteeing the performance of Valuation Adjustment Mechanism,enhancing investor confidence,guaranteeing the company’s business transformation and stimulating the performance of the target company;Finally,the research conclusions and enlightenment are drawn.The research in this article enriches the literature on VAM cases,and also provides references and references for other companies to use VAM in M&A.