The Research On The Earn-out In The Case Of Miteno’s Merger And Acquisition Of BBHI

In recent years,for the purpose of improving the industrial chain and forming large-scale operation,many enterprises have tried to complete the road of enterprise transformation through M&A.In order to avoid high premium and overvalued value,performance compensation commitment is widely used in M&A.However,with the arrival of the commitment period,the problems existing in this payment method,such as low cashing,difficult recourse of performance compensation,reduction of compensation or even refusal of compensation by the M&A;a party at the expiration of the performance period,are gradually revealed.In order to improve this situation and improve the success rate of M&A,Earn-out came into being.This payment method has the characteristics that part of the consideration is paid first and the remaining consideration is paid only when the acquiree completes the performance commitment within the performance period,which improves the defect of performance compensation commitment and avoids the acquiree from falling into a passive state,thus reducing the risk of valuation premium of the acquiree,and this payment method can give the acquiree a certain performance pressure,promote it to improve its business conditions and improve its profitability.The thesis selects the case of miteno’s merger and acquisition of BBHI.Combined with the existing research,firstly,it deeply analyzes the use background and motivation of the Earnout in this merger and acquisition case,and expounds in detail the whole merger and acquisition process,the scheme setting of the Earn-out and the final implementation result.Then it analyzes the application effect of Earn-out from three aspects:event analysis method,financial index analysis method and the synergy effect of M&A,and puts forward relevant suggestions according to the problems existing in the application of Earn-out.The conclusions are as follows:(1)Earn-out can effectively control the risks in M&A,play an incentive role for the management of the target enterprise,and play a positive role and significance in M&A.(2)The design and formulation of Earn-out is the key to the use of this payment method.(3)The Earn-out has certain limitations.and the risk prevention awareness should be established in the application process.