Research On Risks And Prevention Of Performance Commitment In Merger And Acquisition

In the current capital market,mergers and acquisitions have become an important way for enterprises to expand their scale and promote the integration of resources.As an important part of mergers and acquisitions,the fair value of transaction pricing will greatly affect the success or failure of mergers and acquisitions.In response to the high premium risk,the Pledge Agreement is increasingly being applied to mergers and acquisitions as a post-adjustment mechanism for pricing transactions.Performance commitment first entered China's capital market in 2003,due to the development of M&A,its scope of application also gradually expanded.The performance commitment agreement played a significant role in reducing the risk of information asymmetry,alleviating the distortions in M&A transaction pricing and protecting the interests of minority shareholders in M&A Important role.However,the performance of non-compliance cases also occur frequently,because of operating performance does not meet the standard and lead to economic disputes even to court,or by the merger of free choice to change performance compensation terms to transfer the risk is not unusual,so in order to improve the performance of the success rate of commitment,it is especially necessary and urgent to protect the interests of the minority shareholders of the M&A side,conduct research and analysis on the possible risks in the performance promise,and establish a risk prevention system.First of all,by analyzing the status quo of the application of performance promises in M&A in our country,we find that there are promises of performance in M&A of all walks of life.Our performance pledges are characterized by high valuation,high commitment,low cash and high risk.At present,the risks of performance promised in the M&A of our country mainly include the risk of the enterprise valuation,the default risk of the seller of the underlying asset,the risk of short-sighted behavior and the risk of earnings management.The main reasons for the formation of risk information asymmetry,inadequate investigation in advance,changes in the industry situation,the future uncertainty and incentive effects of short-term.Then,this article uses the case study method to analyze the risk and risk prevention and control problems that the M&A side has in the performance promise.Based on the status quo of using the performance pledges of domestic performance and taking the performance commitment agreement signed by Yushun Electronic Technology Co.Ltd.as an example,the study finds that the risks that Yushun Electronics has in performance pledges include industry,market and policy risks,Valuation risk,commitment target setting risk,commitment term risk,performance change compensation risk and commitment party default risk.Finally,on the basis of the above risk analysis,combined with the risk of performance promises in the existing domestic M&A,the paper puts forward some suggestions to the M&A side by stage in order to establish a more comprehensive risk prevention and control system:Prior to the signing of the commitment,mergers and acquisitions should pay attention to analyze the market and industry conditions,and then select the appropriate M&A goals,and finally to be a reasonable assessment of the acquired party;in performance commitment signed,the scientific design of trigger conditions,the target form should be diversified,the deadline The design must also maintain the flexibility,the definition of commitment period can also be combined with the cyclical industry;performance commitment signed,the behavior of the major shareholders to be merged constraints,but also to take the repeated game mode to reduce the M&A default risk In addition,mergers and acquisitions should also develop long-term planning to regulate the behavior of the merged party management,reduce the risk of short-sighted behavior,and promote business performance standards.