Research On Risks And Countermeasures Of Performance Compensation Agreement In Mergers And Acquisitions

With the development of China's economy and the maturing capital market,mergers and acquisitions on the domestic capital market have occurred frequently and the industries involved have become more in-depth.In recent years,high-premium mergers and acquisitions have gradually become a means of mergers and acquisitions where investors rapidly expand and seize the market.As a result,the Securities and Futures Commission proposes a performance compensation mechanism that aims to reduce the valuation bubble generated by the valuation of the income approach and reduce the high-premium merger to both parties.The risk comes.However,with the compulsory implementation of the compensation mechanism,a series of new risks have also emerged.The overly-high performance setting forces the surplus management of the acquiree's management,the large shareholder to manipulate the compensation for profit transfer,and the independent accounting of the acquirer hinders the synergy effect.and many more.As a new type of risk prevention tool,the performance compensation mechanism can evade some of the merger and acquisition risks,and at the same time whether the derivative risk brought by it can be controlled is worthy of our study.In the current research on the relevant performance compensation mechanism,scholars mainly focus on the case of failed performance undertakings such as backdoor listing,major shareholder infringement of interests,and less attention is paid to case studies on performance compliance.This article analyzes the legal basis of the performance compensation agreement,analyzes the risk prevention mechanism of the performance compensation agreement based on information asymmetry theory,option theory,incentive theory,principal-agent theory and other theoretical basis,and studies the derived derivative risks.,to provide follow-up preventive measures to provide ideas.Next,through the case study method,taking the Olympic Games Entertainment M&A and Philharmonic Tour as examples,we first conducted a comparative analysis of the profitability,solvency,and operating capacity of the merged companies before and after the merger,and then Pre-merger and pre-merger risk mergers and acquisitions may be involved in risk and propose corresponding measures,and finally concluded that the performance compensation agreement can not completely circumvent the merger and acquisition risk,even if the performance commitment is completed successfully,there are mergers and acquisitions premium is too high,the performance target is not set Reasonable,risk management surplus management.Since the implementation of the performance compensation system,it has been unsatisfactory to reflect the implementation of the agreement in the market,from the mandatory signing of the beginning to the subsequent negotiation between both sides of the transaction and the signing of the performance commitment.How to reduce the valuation bubble,how to realize the original intention of the management incentive,and how to control the derived derivative risks,are worth our in-depth study.This paper takes the case of successful achievement of performance commitment as the background,analyzes the transaction value before the merger and acquisition,the performance target setting in the M&A,and the change of the performance of the acquired party after the merger and acquisition to discuss the risk point in the signing process of the performance compensation agreement.corresponding strategy.