Research On Performance Commitment Mechanism In Enterprise M&A

Since 2013,the number of mergers and acquisitions in China has continued to grow,and corporate mergers and acquisitions have become increasingly popular in the domestic A-share market.Although the number of corporate cases implementing M &A and restructuring has increased year by year,judging from the frequency of domestic and international mergers and acquisitions,70% of the mergers and acquisitions ended in failure,and only 20% of the successful mergers and acquisitions in China’s capital market.Mergers and acquisitions are an indispensable way for rapid enterprise development,but due to information asymmetry and other factors,mergers and acquisitions have great risks.Subsequently,in order to reduce the risks in mergers and acquisitions,the performance commitment mechanism came into being.In recent years,the performance commitment mechanism has been continuously improved in China’s capital market,the number of performance commitments has increased sharply,the scale of performance commitments has become larger,and the performance commitment mechanism has become more and more Many industry sectors are used.However,the performance commitment mechanism has also exposed many problems in the process of being widely used,and the failure rate of performance commitment has also increased year by year.The unfulfilled performance commitments face not only the decline in stock prices,litigation risk but also the impact of huge goodwill impairment and net profit for listed companies.This article uses literature,case and event research methods to combine the background of corporate mergers and acquisitions and the status of performance commitments.Based on the theory of performance commitments,this paper analyzes the case of Chengzhi ’s merger and acquisition of Baolong Environmental Protection,mainly analyzing the process of Chengzhi ’s merger and acquisition of Baolong environmental protection.The status of performance commitments signed in China,the motivations for signing performance commitments,and the conclusions of the study concluded that the motivations for signing performance commitments are:mitigating information asymmetry risks,reducing the high valuation risk of M & A assets,transmitting signals to increase investor confidence,and protecting small and medium-sized investments And incentives constrain the management;because the performance commitment in this case has not been completed,the reasons for theunfulfilled performance commitment and the impact on the company are analyzed after analyzing the cause of the action.(Unrealistic performance commitments,excessively single indicators used for performance commitments),unreasonable valuation reasons,internal reasons(unsatisfied government procurement demand leads to lower-than-expected revenue,lower product gross margins,poor M & A integration effects,internal control deficiencies and management There are ethical issues),external reasons(action Increasing competition,insufficient supervision and low cost of violations),the impact of unfulfilled performance commitments on the company: short-term market effects are reflected in the decline in stock prices affecting corporate value,listed companies face litigation risks,and listed companies face large-scale goodwill impairment risks And the reputation of listed companies is damaged.Finally,relevant suggestions are made from the company level,investor level and macro level.It provides a certain reference for the literature of research performance commitment,and provides a reference for signing performance commitment agreements with corporate mergers and acquisitions.