The Effect Of Performance Compensation Agreement On The Actual Control Of The Acquired Company

In recent years,with the continuous improvement of China’s marketization,mergers and acquisitions as the main means of expanding the scale of listed companies in the capital market to flourish.However,because the information available to the acquirer and the acquirer before the transaction is not asymmetric,there is a lack of corresponding fairness in this market,and the commitment of performance compensation is widely used in this context.According to Wande database statistics,from 2014 to 2016,803 shares as a consideration of assets purchased through the audit,as of 2016 need to fulfill the performance commitments of the merger and acquisition transactions for 512,performance-to-be more than 60%,in 2016 a total of 408 completed performance commitments,about 80%of the total transactions,involving 325 listed companies,accounting for 77%.Theoretically,the performance compensation commitment system can guarantee as much as possible the acquisition party to provide real business conditions and reasonable expectations of future performance,and based on signal theory,the enterprise sareto sign the performance compensation commitment will also send a positive signal to the market,which will also bring about the pull up the main merger and acquisition company share price and other positive effects.However,the author notes that during the performance commitment period,the original shareholders in order to maintain the expected operating conditions of the acquired company,to prevent the merger and acquisition party maliciously pull down profits caused by the company default will inevitably be the acquisition company’s business strategy during the performance commitment period,personnel changes in advance agreement.At the same time,the acquirer will generally agree to an agreement with the original shareholder whether it is due to the negative impact of the company’s share price on the future operation or the performance of the company is not up to standard.So did the acquirer really gain the actual control of the acquired company during the various agreed performance commitments with the original shareholders?The author notes that in July 2019 Oriental Seiko announced that its wholly owned subsidiary acquired in 2016 was at risk of losing control.In this context,this paper first combs the research on the commitment of gambling agreement and performance compensation at home and abroad,and introduces the related concepts of merger and acquisition,performance compensation,and actual control in the second part.Then this article will be Guangdong Oriental Seiko Technology Co.,Ltd.acquisition of Pleod New Energy Technology Co.,Ltd.as a case study performance compensation commitment to the impact of the actual control.Therefore,in the third part of this paper on the merger and acquisition of both sides made a basic introduction,listed the merger and acquisition program and performance commitment terms,combed the case development of the former and the consequences.The fourth part from the analysis of the degree of influence of The Original Shareholders and the change of executives in The Fourth Is the conclusion that Oriental Seiko did not get 100%control of Pryor during the performance commitment period,and pointed out the problems existing during the trading and commitment period.The fifth part is targeted to the listed companies in the merger and acquisition of how to sign a performance compensation agreement to ensure the success of mergers and acquisitions need to pay attention to the matters.The sixth part summarizes the above conclusions.