Risk Identification And Response Of Performance Commitment In M&A Of Listed Companies

In recent years,listed companies have continued to realize the revitalization of stock assets and stimulate endogenous growth momentum through mergers and acquisitions.However,according to continuous research on mergers and acquisitions,most of the merger and acquisition transactions showed that the underlying assets did not meet the strategic development of the enterprise,the transaction price paid was too high,and the performance after the merger and acquisition failed to meet expectations.Therefore,performance commitment is more and more widely used in M&A transactions as a contract arrangement to protect the interests of small and medium shareholders and prevent M&A risks.However,in practice,the performance promise made by the merged company itself has also caused a series of problems,such as the high performance commitment supports the high valuation of the target company,resulting in a high M&A premium rate and resulting in a large amount of goodwill.,causing potential dangers for the later goodwill impairment to erode the profits of listed companies;and in order to complete performance commitments,the target company even manipulate accounting profit,when the performance commitments signed at the time of mergers and acquisitions cannot be realized,the one who is obliged to compensate the listed company does not subjectively perform compensation obligations or objectively does not have the ability to compensate,etc.Therefore,it is necessary to select typical cases and study the performance prevention mechanism of M&A risk prevention to improve the relevant provisions and improve the security function.Under this background,this paper adopts the literature research method and case study method,on the basis of fully reading the relevant literature,based on the information asymmetry theory,signal transmission theory,etc.as the theoretical basis,select a new energy automobile industry M&A case,which is J&R Fire Fighting acquired Wotema,conducted an thorough analysis of the risk prevention role of performance commitments in the M&A process,and identified how it derive pushing up the company ’s valuation and manipulating accounting profits,as well as the derivative risks of failure to perform performance compensation obligations,and finally put forward corresponding suggestions based on the identified risks.Based on the perspective of listed companies,this article fully identifies the derivative risks caused by performance commitments in the process of mergers and acquisitions,so that listed companies have a more comprehensive and profound understanding of performance commitment agreements in the M&A boom,and find that the risk avoidance mechanism is incomplete.They should consider its role in preventing merger and acquisition risks in a more rational way and assess the performance of the target company during mergers and acquisitions reasonably,thereby avoiding excessive reliance on unrealistic performance commitments that cause loss of profits to listed companies,and improving the risk prevention effect of performance commitments.This has certain reference significance in improving the probability of success of M&A.