The Performance Impact On The Acquirer Of Profit Forecast Compensation System In M&A Of Listed Companies

As one of the most important paths to reshape the company industry,optimize the allocation of resources and achieve strategic objectives,number and amount of mergers & acquisitions activities have kept growing since 2013,in 2017,the number of M&A activities reaches 8,391 and the transaction amount exceeds 3,420.29 billion yuan.But the complexity and high risk of M&A made its success rate remains 20%.In order to restrain malicious pricing,protect the benefits of minority shareholders and help the integration after M&A,performance commitment and compensation agreement is adopted by many listed companies as a valuation adjustment mechanism.However,the frequently occurrence of overpricing and default increasingly highlighted the drawbacks of performance commitment and compensation agreement,the impact of agreement on acquiring company should be re-examined too.This article chooses M&A activities whose acquiring company is A-share listed company(or its holding subsidiary)in China from 2013 to 2017 as research objects,then manually collect transaction details,information of both companies and implementation of performance commitment,using empirical analysis method to investigate the impact of compensation agreement on acquiring company respectively in three periods-when signing the agreement,during the commitment period and after the agreement expires.The analysis result shows that performance compensation clause has positive influence on both short-term and long-term performance of acquiring companies;oneway performance compensation clause has better effect compared to two-way performance compensation clause.Besides,after the agreement expires,the performance of acquiring company does not decline,but the extent of performance commit implementation and performance of acquiring company moving the same direction.In conclusion,performance commitment and compensation agreement has an overall positive impact on acquiring company.But in order to have a better use of performance commit,the clause of performance commit can still be improved and the earn-out clause,which the most commonly use clause in mature capital market,can be introduced to make listed companies be able to choose appropriate clauses according to circumstances.