Research On The Performance Commitment In The Internet Companies From The Perspective Of The Acquirer

With the rapid development of Internet industry,M&A gradually becomes important means of Internet companies expanding capital,occupying market,controlling resources and crossing industry barriers.Yet because the Internet enterprise have less assets and high profitability,the evaluation firm often chooses the income method,which is very subjective.Therefore,high premium M&A is born.Because of information asymmetry,acquirer is not confident of the profitability of the acquired party.Once the target company operating conditions deteriorate,acquirer need to make a provision for the underlying asset,a lot of goodwill impairment provision will be made,which is not good for the financial statements and acquirer's corporate image.In order to avoid the loss caused by information asymmetry as much as possible,performance commitment arises at the historic moment.However,in the actual application process,the success rate of performance commitment is very low,and it may even become the earning management tool of major shareholders of listed companies.The purpose of this research is as follows: Firstly,to discuss the motivation of performance commitment of Internet enterprises.Performance of commitment has the advantages of dealing with the risk premium and giving investors confidence,so performance commitment is loved by both parties involved in corporate merger.But the Internet industry commitment has the problem of low success rate,we should analyze the risk of performance commitment from the perspective of the acquirer to play the role of performance commitment to the largest extent.Secondly,take the market mispricing hypothesis and the hollowing out theory as the theoretical basis,combined with the motivation and current situation of performance commitment in the Internet industry,this paper analyzes the risk of performance commitment in each stage of M&A of Internet companies and puts forward countermeasures.At the same time,taking the domestic Internet company35.com as an example,which was established earlier and keen on M&A,as an example,it analyzes its motivation of M&A Merger and acquisition process and results,pointed out the risk of the acquirer and put forward countermeasures,so as to provide reference and guidance for other Internet companies,promote the further development of the Internet industry.The article takes the merger and acquisition of Daoxi Technology by 35.com as the main line,this paper combines theoretical analysis with case analysis to conduct an in-depth study on the risk of performance commitment.Firstly,by means of literature research,the connotation and motivation of performance commitment and risk prevention and control are sorted out.Secondly,the concept of company value performance commitment is defined according to the literature collation,and basic theories such as the theory of market mispricing hypothesis are introduced to lay a foundation for the following analysis.Thirdly,from the direction of the motivation of performance commitment,this paper analyzes the current situation of the use and completion of performance commitment in Internet industry M&A.Finally,using the case analysis method,taking the merger of Daoxi Technology of 35.com as an example,this paper analyzes the process of merger and acquisition of 35.com and the completion of performance commitment.Based on the analysis of the influencing factors of performance commitment risk,this paper makes a specific analysis of the risk of performance commitment of35.com,and puts forward targeted risk countermeasures.The research contribution of this paper is reflected in the following two aspects: Firstly,on the research content,this article from the perspective of performance pledge motivation and the present situation,summarizes the risk influence factors,on case we are committed to the risk analysis results.Whereas a great deal of research about the performance commitment to focus on improving the system of performance compensation agreement and accounting performance compensation ways,unable to solve the problem of risk in this paper,the risk analysis of real can more comprehensively summarizes the risk factors,standardize enterprise behavior of mergers and acquisitions.Secondly,in the case of choice,this articles was established based on the early Internet companies35.com,for example,to analyze its with city science and technology after the performance pledge agreement of risk.Previous studies mostly take companies that have just passed the performance commitment as cases,while this paper chooses the case events that have completed earlier,because this can better analyze the business performance of the target party after the performance commitment period.With the advent of the Internet era,the research on the risks of the performance commitment in Internet companies from the perspective of the acquirer can promote the further development of the Internet economy,and also provide references for companies in other industries to prevent the risks of performance commitment.