| With the continuous development of China’s social capital market,more and more enterprises enhance their competitiveness or industrial transformation through mergers and acquisitions.In this process,due to the existence of asymmetric information,the phenomenon of high premium and high valuation is also increasing,which leads to a huge amount of goodwill and increases the risk of goodwill impairment,which in turn generates huge goodwill and increases the risk of goodwill impairment.In order to reduce this phenomenon,performance commitment has been widely used in the process of M&A.However,in recent years,due to the increase in M&A and restructuring activities of more and more listed companies,more and more "high performance commitments and high goodwill" have occurred,and there are more and more cases where the final performance promises have not been realized,and even huge goodwill impairments will occur,which also shows that the performance commitments have not achieved the expected effect.Based on this problem,this paper will take Liantronics as an example to analyze the cases of enterprises in two different industries that it has acquired,study how high-performance commitments affect goodwill impairment throughout the commitment period,and what consequences will occur to enterprises after goodwill impairment,and finally make suggestions on how enterprises should improve performance commitment agreements and prevent goodwill impairment risks in mergers and acquisitions.After in-depth research,this paper draws several conclusions:(1)The high-performance commitments signed by mergers and acquisitions have excessive support for the merger consideration and unreasonable performance commitment targets,which in turn generate a large amount of goodwill and increase the risk of goodwill impairment;(2)In the fulfillment of high-performance commitments,the target enterprise conducts earnings management in order to achieve the performance target,manipulates the company’s profits,and increases the risk of significant impairment of the goodwill of the acquired enterprise;(3)When the high performance commitment cannot be achieved and the acquirer cannot make up for the loss through performance compensation,the acquirer will be more inclined to make up for goodwill impairment,but at this time,there will be untimely accrual,which will increase the risk of goodwill impairment.(4)Through the analysis of the consequences of goodwill impairment,it can be summarized as follows: goodwill impairment changes the company’s capital structure,reduces profitability and solvency,may have the risk of bankruptcy,and makes investors lose confidence,which is reflected in the sharp decline in stock prices.In view of the above problems,this paper argues that when conducting M&A activities with performance commitments.It is necessary to formulate reasonable performance commitments,improve the performance commitment supervision system,and ensure the effectiveness of performance compensation;and improve the goodwill impairment test process.It is hoped that the research in this paper can provide a reference for listed companies in similar situations and truly exert the effect of performance commitment. |
