| After M&A restructuring,companies can optimize the internal structure of industries,expand their scale and achieve their development goals.However,due to the emergence of problems such as principal agency,a performance commitment system is introduced in China to further improve M&A performance.Different performance commitments will bring different effects.A reasonable performance commitment can reduce information asymmetry and promote the M&A process.It reduces agency costs and motivates the management of the subject company to make efforts to improve the performance of the subject company.However,unreasonable performance commitments can bring great potential risks to the M&A parties,such as broken performance promises,unfulfilled performance compensation,and excessive pressure on the performance of the subject company.The communication technology industry,constrained by downstream operators,is in need of transformation and upgrading,and M&A restructuring has become its preferred method.The game industry has become a popular M&A target in recent years due to its high yield and light asset characteristics.Therefore,the case of this paper selects the M&A of communication industry and game industry to study the problems and reasons for the use of performance promise in their M&A,which has certain practical significance for the same type of listed companies.The case selected in this paper uses Fuchun as the M&A company and Mochikaka as the subject company,and uses literature analysis,case study and event study methods to analyze the M&A event.Based on the summary of scholars’ research results,the paper provides an in-depth analysis of the problems and suggestions on the use of performance commitments in this M&A.The main contents of the M&A event include: first,describing the specific situation of both parties,the motivation and process of the M&A;second,providing an in-depth analysis of the performance commitment scheme,exploring its motivation,specific content and actual performance;second,evaluating the M&A event with performance commitment,applying the financial index method,the event study method and the economic value added method,and summarizing the existing problems;finally,taking into account the actual situation,we Finally,we suggest improvements to achieve better results for similar M&A events in the future.The results of the study show that the subject company Mochikaka’s repeated performance commitment failures have negatively affected the financial performance and market response of the M&A company Fuchun.The analysis shows that the following problems existed in the M&A of Fuchun: the M&A target’s premium was too high and the transaction price was paid in an inappropriate manner;the performance promise target was set too high and the sustainability of the target company was poor;there were loopholes in the performance compensation clause and the risk of performance compensation recovery was high;over-reliance on performance promise and neglect of post-merger resource integration.Based on this,this paper puts forward the following suggestions: enhance the reasonableness of the valuation of the M&A targets and improve the transaction consideration payment method;set reasonable performance commitment targets and deadlines;close the loopholes of performance compensation terms and reduce the recovery risk;and pay attention to the post-merger resource integration. |
