A Study On Performance Failure And Economic Consequences In Corporate Mergers And Acquisitions

With the gradual increase in the practice of mergers and acquisitions in my country,in order to reduce the risks of information asymmetry and high valuations,most companies choose to sign performance compensation commitments,but the phenomenon of "high commitments and high valuations" generally appearing in the signing stage also reflects the target The company may make performance commitments that ignore actual profitability in order to obtain high consideration,which will increase the possibility of performance failures and weaken the effect of performance commitments,although performance compensation can alleviate the impact of performance failures to a certain extent.The losses caused by the listed companies,but the performance failure will still have a series of adverse economic consequences for the listed companies.Therefore,the purpose of this paper is to study the reasons for the failure of performance commitments in mergers and acquisitions and its economic consequences,and to put forward suggestions for improvement in the application of deficiencies,in order to improve the performance commitment system and reduce the negative impact of performance failures.Improve the completion rate of performance commitments in mergers and acquisitions.Using the case analysis method,this paper selects Zhongxin Fluorine Materials’ acquisition of Gaobao Mining as a research case,and analyzes the reasons for the failure of performance promises by comparing the performance and industry status of the target companies before and after the merger.By analyzing the financial indicators of listed companies,the impact of goodwill impairment,and the short-term market reaction of performance commitments,it is concluded that:(1)In exchange for high merger consideration,the target company may take overproduction and Increasing credit sales improves the company’s performance,but in fact,this state cannot be sustained,which will not only affect the formulation of performance commitments,but also lead to an overestimation of the company’s value;secondly,both parties to the merger and acquisition in this case belong to the fluorine chemical industry.Due to the relatively long period of integration after mergers and acquisitions due to industry characteristics,it is difficult to stimulate synergies in the short term,which will lay hidden dangers for the failure of performance;(2)The merger did not achieve the target of mergers and acquisitions,and failed to achieve the goal of listing.The business development of the company has brought about great improvement,and the poor actual profitability of the target company has led to the impairment of the goodwill formed during the premium merger,which has seriously affected the operating results of the listed company;when the performance commitment is signed,it will have a positive effect in the market;Once the performance of the target company fails,the market reacts negatively and the stock price drops,which dampens the confidence of investors.This paper puts forward suggestions from three perspectives of mergers and acquisitions,evaluation agencies and regulatory agencies,and provides effective help for the formulation of performance commitments and the accuracy of company value evaluation,so as to reduce the possibility of performance commitments,and to promote the performance commitment system in mergers and acquisitions.In the process of better application,and remind the acquirer to increase the prudence in mergers and acquisitions,and improve the completion rate of performance commitments in the application of mergers and acquisitions.