Application Motivation And Effect Analysis Of Enterprise Cross-boundary Merger And Acquisition Bet Agreement

An agreement,referred to as a Betting Agreement or Valuation Adjustment Agreement,is a pact between two parties to lessen the doubt of the acquired party’s future earnings and the disparity of information between them.But in fact,the cases of failed bets frequently occur.In both 2017 and 2018,it is evident that more than 30%of the companies listed had not fulfilled their performance pledges,as evidenced by the data.From the viewpoint of M&A types,the majority of them are cross-border;thus,by generally embracing the income method of valuation,a high performance commitment and high valuation guarantee the cause and effect.High valuation leads to a high premium,which in turn generates high goodwill,and ultimately leads to a hard performance commitment to reach the standard,management’s earnings management,a considerable impairment of goodwill,and disagreements between the parties.involved in the bet.This paper investigates the motivation and impact of the bet agreement’s implementation in the cross-border merger and procurement of Zhixiang Information and Meidu Education by Shiji Dingli counterbet,based on the concept of information misalignment and motivation.First of all,the century Dingli bet merger and acquisition of Zhixiang information and Meidu education plan and process review.Secondly,the risk and the motivation of the bet are analyzed.The risk analysis shows that there are valuation risks,unreasonable performance clause setting risks,the effect of the bet agreement is analyzed,which is mainly divided into financial effect,synergistic effect,investor confidence effect and business transformation guarantee analysis.Finally,the establishment of the bet agreement is proposed and the research conclusion is drawn.By studying the cross-border merger and acquisition case of Century Dingli,this paper offers insight and knowledge to other companies in the industry,thus achieving a "win-win" situation and augmenting the success rate of cross-border mergers.The importance of industrial growth is of great practical importance.