Risk Management And Control In The Later Period Of Performance Commitment

With the continuous deepening of economic globalization and the continuous improvement of China’s capital market,market competition has intensified,and more and more companies have begun to achieve strong alliances between enterprises through mergers and acquisitions and reorganization to enhance their core competitiveness.Performance commitment as an indispensable part of M&A activities can alleviate investors’ irrational behavior,and as a risk adjustment mechanism in the late stage of performance commitments,it can play a role in risk protection for mergers and acquisitions,and also bring incentives to the target company,its importance It became more and more prominent.This paper stands on the position of the acquirer,based on the theory of risk management and control,according to the risk management and control process of four elements of risk management and control,we conducted a case study on the later stage risk of Wellead acquisition of Lang He medical performance.Taking the data of its performance commitment period in 2018 for analysis,preliminary identification of possible risks: commitment compensation risk,low profits and operating risks.Combined with the analysis of financial statements and the post-commitment risk assessment system,the final evaluation of the performance commitment compensation risk,product cost control risk,and excessive sales expense risk.According to different risks,specific risk response measures are given.For commitment compensation risk:dynamically monitoring performance levels;supplementing due diligence work;adjusting performance commitment methods;adding performance compensation clauses.For product cost control risks: build a "research-production-sales" information system structure,clarify the production principle of R&D services;establish a product material case database,purchase raw materials reasonably;promote intelligent production and streamline personnel in terms of quantity and quality.For the risk of excessive sales expenses,establish a merchant system and strengthen the screening of merchants’ credit rating;increase online sales and direct sales models.Finally,the use of systems,organizations and technical safeguards to ensure that risk management and control activities can be effectively implemented.Through the evaluation of the late risk of Wellead Performance Commitment,we put forward practical risk prevention suggestions,help Wellead to control the risk of late performance commitment,and safeguard the interests of the M&A party in the performance commitment.At the same time,it also provides risk management and control recommendations for performance commitments for other companies in the capital market that are using performance commitment mechanisms.