Research On The Causes And Economic Consequences Of Performance Failure In The Merger And Acquisition Of Zanyu Technology

With the competition in the capital market,mergers and acquisitions have become an effective means to maintain the stable development of listed companies.In Mergers and Acquisitions(M&A)transactions,signing performance commitments can reduce M&A risks,and most enterprises sign performance commitments at the time of M&A.However,with the signing of more and more transactions with performance commitments,some drawbacks have also emerged,such as overvaluation of target assets and excessive performance commitments set during mergers and acquisitions,which will cause the risk of performance failure.The fulfillment rate of performance commitments is decreasing year by year,and if the enterprise faces a series of economic consequences such as a loss of performance,it will cause a series of economic consequences such as loss of business performance.Therefore,it is important to study the causes of performance failure and the economic consequences thereof.This paper takes the case of Zanyu Technology’s M&A as the research object,mainly uses the literature research method,case analysis method and event research method,deeply studies the causes and economic consequences of performance failure,and finally draws conclusions and makes suggestions.This article first describes the process of Zanyu Technology’s acquisition of Dukuda,Keita Chemical and Xintian Damax,and then sorts out the performance commitment;Secondly,the reasons for the performance failure in this case are analyzed from four aspects: the external environment of the enterprise,the setting of the performance commitment agreement,the operation of the enterprise,and the institutional reasons.It then analyzes the impact of market performance,operating results and free cash flow after the performance failure.The study found that: First,the failure of performance in the merger and acquisition of Zanyu Technology caused a negative market reaction.When the performance commitment is signed in the early stage,there is a positive market reaction,and when the performance failure occurs during the commitment period,there will be a negative market reaction and the stock price will fall.Second,business performance declined.Decreased profitability and development capacity.Third,when compensation for performance failure is received,the free cash flow of the enterprise increases.Through the above analysis,the following conclusions are drawn:(1)The performance failure in the merger and acquisition of Zanyu Technology stems from the high valuation and high performance commitment of the initial pricing.(2)Profit failure leads to negative effects on performance commitments.and put forward reasonable suggestions:(1)reasonably assess the value of the underlying asset;(2)Reasonably set up performance commitment agreements;(3)Strengthen payment methods and exchange rate risk control measures;(4)Strengthen financial integration risk control measures.This article enriches the content of cross-industry M&A and cross-border M&A performance commitments in the chemical industry,and can provide reference for relevant enterprises and optimize the content of their performance commitment agreements.