Research On The Application Risk And Prevention Of VAM Agreement In The Merger And Acquisition Of Tongshun Company

Since the reform and opening up,my country’s market economy has developed rapidly,and the economy has undergone rapid transformation and upgrading.At the same time,with the rapid development of Internet technology,the competition among enterprises has become increasingly fierce.In order to improve their competitiveness and occupy a leading position in the market,more and more enterprises have grown through mergers and acquisitions.At the same time,in order to regulate this market behavior and give full play to the positive role of mergers and acquisitions in the market,the government has also issued a number of related policies and regulations.In the high premium mergers and acquisitions of enterprises,in order to reduce the high valuation deviation and prevent a series of risks brought by mergers and acquisitions,the VAM agreement came into being.However,according to relevant statistics,in the M&A and reorganization of ethical enterprises in my country’s A-share market,the failure rate of VAM remains high,followed by a series of corporate risks brought about by VAM agreements,which seriously affect the healthy development of enterprises..Therefore,how to correctly understand the advantages and disadvantages of VAM agreements and reduce the risk of using VAM agreements in corporate mergers and acquisitions needs to be further explored.This paper takes Tongshun’s multiple mergers and acquisitions as an example,and combines the literature review method to conduct relevant research on the risks of the application of gambling agreements in corporate mergers and acquisitions.The research of this paper firstly summarizes the relevant research on the gambling agreement through literature analysis,and outlines the relevant definition and theoretical basis of the gambling agreement.Secondly,by analyzing the case of Tongshun’s continuous mergers and acquisitions,summarizing the risks in the mergers and acquisitions cases,and finally putting forward systematic suggestions for the whole process of the VAM agreement.The research result of this paper is that,through analysis,it is found that the main risks faced by enterprise mergers and acquisitions under the VAM agreement are: policy and legal risks before the signing of the VAM agreement,the selection risk of the M&A target,the valuation risk in the signing of the VAM agreement,and the performance commitment risk.As well as the risk of goodwill impairment after the signing,the risk of management behavior,and the risk of legal execution of performance commitments.Finally,in order to ensure the effective use of VAM,the following suggestions are put forward: keep abreast of relevant laws and policies and their dynamics;rationally choose M&A targets;enterprises strengthen risk awareness in the process of M&A and reorganization;formulate reasonable valuation targets and Adjust the plan;reasonably design the VAM agreement and performance compensation clauses;strengthen the control of the performance promiser of the VAM agreement.