Research On The Control Of M&A Risks With Payment Program Design

In recent years,there are more and more mergers and acquisitions transactions happened in China's capital markets,which attracted wide attention from all sectors of society.With the growing scale of M&A transaction,the payment program of M&A is more and more important,which also shows the characteristics of innovation and diversification.Nowdays,the acquirers pay more and more attention to the risk control function of the paymentprogram.This paper bases on the acquisiton case of TIANMA by Ourpalm in 2015,and uses paymentprogram design as a tool to prevent and control M&A risks.It studies how companies prevent and control M&A risks through the design of payment program.This article analyzes the purpose for the merger and acquisition,the risk of mergers and acquisitions,and the payment program.It adopts from payment methods,payment considerations,and payment arrangements.Then,this paper analyze the design of M&A payment program to prevent and control the risk of M&A,and analyze the mechanism of it.At last,this paper builds the payment program designs the model of contorl M&A risks.Then,this paper summarizes the outstanding design points of this M&A case,and points out that the two designs have very strong innovation and effective risk control effect.Then points out that there are two issues in the payment case:the premium of merger and acquisition,the risk of impairment of goodwill,and the fast pace of payment,and put forward optimization suggestions.At the end of this article,we give enlightenment that the paymentprogram should be designed as a risk prevention and control tool,and the factors should be fully considered when designing the paymentprogram,and the role of intermediaries in M&A transactions should be strengthened.Through the studies of the case,it is found that the design of paymentprogram can control of valuation risk,financial risk,regulatory risk,equity dilution risk and integration risk.By selecting stocks or mixed payment,we can control valuation risk,financing risk and integration risk,cash payment instruments control regulatory risk and dilution risk;the value of compensation agreements and other additional provisions can control the valuation risk and integration risk;we can choose the deferred payment to the prevention and control of financial risk.