Risk Research On Leo Group's Acquisition Of Zhiqu Advertising Under Performance Commitmen

According to the "Mid-2022 China Corporate M&A Market Review and Foresight Report" released by Pw C,there were 12,790 M&A transactions in China in the whole year of 2021,and the number of M&A transactions in China remained at a historical high in the first half of 2022.More and more companies are forced to turn to M&A restructuring due to various pressures.However,M&A is prone to problems such as over-valuation,severe premiums and large goodwill impairment,resulting in heavy losses for companies and seriously affecting the quality of M&A.In order to reduce M&A costs and M&A risks,performance pledges were created in the hope that signing performance pledges would reduce the information gap between the M&A party and the subject company,motivate the subject company to operate actively,protect the interests of investors and prevent the occurrence of M&A risks.However,the continued low rate of completion of performance commitments has revealed many problems.Therefore,it has become increasingly important to identify the risks arising from the signing of performance commitment agreements in the M&A process and how to deal with such risks effectively.Based on the performance commitment agreement,this paper divides the M&A process into three stages: before the performance commitment is set,during the execution of the performance commitment,and after the expiry of the performance commitment,and identifies and analyses the risks of high valuation and improper selection of the target company before the performance commitment is set,the risks of high performance target and financial fraud during the execution of the commitment,and the risks of integration and goodwill impairment after the expiry of the commitment.integration risk,goodwill impairment risk,compensation and litigation risk.The paper also evaluates the risks of corporate M&A under performance commitments in terms of both market reaction and financial indicators,and proposes risk countermeasures that both parties to M&A should improve the compensation agreement for performance commitments,set reasonable performance targets,actively carry out integration work,strengthen the management of the subject company,and strengthen supervision by regulatory authorities.