Research On Performance Commitment Of Fuchun’s M&A Of Mochikaka

In recent years,with the rapid growth of the game market,the scale and number of mergers and acquisitions in the domestic game market are increasing day by day.It is common for listed companies to acquire game enterprises across industries in order to expand their business scope and increase profits.Different from the traditional industry,the asset structure of the game industry shows an obvious asset light feature.The transaction consideration required to pay for the merger and acquisition of game enterprises is usually higher than their book value,which is characterized by high premium and high risk.In order to reduce the valuation deviation in the process of M&A,encourage the management of the merged enterprises,and reduce the potential risks in M&A,performance commitment agreements,as a common tool for risk management,have been widely used in the game industry M&A.However,at present,the substandard rate of M&A performance commitments in the domestic game industry is obviously high,causing huge damage to the interests of listed companies.Therefore,it is of great practical significance for listed companies to analyze the problems and causes of the use of performance commitments in the game industry mergers and acquisitions.This thesis selects Fuchun Shares’ M&A of Mochikaka as the case study object,mainly adopting the methods of literature analysis,case study,comparative analysis and event study.The data selected for the analysis in this thesis comes from the annual reports,announcement information and Guotai An database disclosed by the case company in each year.Basing on summarizing the research results,this thesis makes an in-depth analysis of the problem of failure to meet the performance commitment of Mochikaka,mainly including the following aspects.First of all,the basic situation of the case is described,and the company profile of Fuchun Shares and Mochikaka,the specific content of the performance commitment agreement and its signing motivation are introduced;Secondly,it analyzes the completion and impact of performance commitment,including the degree of substandard performance commitment,the recovery process of performance compensation and the adverse impact on Fuchun Shares;Thirdly,it analyzes the reasons why the performance commitment of Mochikaka is not up to standard from the early,middle and late stages of performance commitment setting;Finally,according to the causes of performance commitment failure,some suggestions are put forward.The research results show that the failure of performance commitment will have adverse effects on the financial performance,market reaction and reputation of the acquirer Fuchun Shares.The main reasons for the failure to meet the performance commitments include:before the performance commitments were set,Fuchun Stock lacked prudence in M&A,was too optimistic about the environment of the game industry,and the defects in valuation methods led to higher M&A premium risk and improper payment methods of transaction consideration;In the setting of performance commitment,the target performance is far higher than the actual performance ability of Mocky Card,and the sustainability of the game business profits is not fully considered.However,the loopholes in the performance compensation clauses lead to difficulties in the recovery of performance compensation,which further damages the interests of listed companies;After the performance commitment was set,the lack of response of the management team of Mochikaka to market changes made it difficult to maintain the performance growth.Fuchun ignored the resource integration after the merger and acquisition,which affected the generation of synergy.In view of the substandard performance commitment of cross industry M&A,the thesis puts forward several suggestions: Before the performance commitment is set,the acquirer should pay close attention to the changes in the industry environment,prudently select the subject matter of M&A,adopt appropriate valuation methods to improve the reasonableness of the valuation of the subject matter of M&A,and improve the transaction pricing and payment methods;In the setting of performance commitment,the target and period of performance commitment should be reasonably set,and the loopholes in performance compensation provisions should be remedied to reduce the risk of recovery;After the performance commitment is set,it is necessary to strengthen the talent reserve and incentive of the subject matter of the merger and acquisition,and attach importance to the resource integration in the later stage of the merger and acquisition.