A Research On The Application Of Earn-out In M&A Based On The Case Of Jiu’an Medical

With the increase of cross-border M&A cases,more and more enterprises,whose target companies are overseas,in order to reduce the information asymmetry in M&A risk,choose to use earn-out plan in M&A payment.Jiu’an Medical is one of the representative cases.In view of its acquisition of French company e Device,the thesis analyzes the existing application problems of the earn-out plan.This thesis probes into the current situation and future prospect of the medical device industry,and demonstrates the increasing trend of M&A.Then thesis introduces both sides of the case,the process of the case and the setting mode of the earn-out plan.The earn-out plan in the acquisition of e Device by Jiu’an Medical is analyzed,including four aspects.Firstly,the expected performance of the earn-out plan is summarized;Secondly,three important time points related to the acquisition of e Device by Jiu’an Medical are analyzed by using the event study method;Thirdly,use financial indicators to conduct horizontal and vertical comparative analysis of Jiu’an Medical’s operating performance in the performance commitment period;Finally,the research and development investment is selected as the non-financial index to analyze the cause of the low net profit during the period.The contribution of the thesis lies in that,first of all,it enriches the response to the risk of customer concentration.In previous studies,less attention has been paid to the design of special solutions to the customer concentration of the target company in the planning stage.In this thesis,combined with the Yahoo contract compensation mechanism in the case of M&A of BBHI by Miteno,a feasible solution is proposed for the study case,which provides a reference for enterprises to deal with the problem of high customer concentration of the target company.Secondly,it focuses on the problem of cash reduction of major shareholders and the signal value.In domestic researches,there are few researches on how to deal with the problem of major shareholders’ selling and cashing out in the process of M&A,and few researches on the signal value of payment announcement.In this thesis the event study method is used to prove the existence of short-term signal value of the earn-out plan,and the existence of the situation that the major shareholders take advantage of the internal information and announcement disclosure time to reduce their holdings to cash out and damage the interests of minority shareholders.In the setting of the terms of the agreement,the self-interested behaviors of major shareholders during the performance commitment period can be reduced to a certain extent through the performance agreement of both sides.